Hong Kong launches central gold clearing system, boosting world’s gold hub status

Chief Executive John Lee Ka-chiu announced on Tuesday the start of the trial operation of Hong Kong’s central clearing system for gold – enhancing the gold trading ecosystem for global investors and institutional capital seeking safe-haven assets.

Lee said at the Hong Kong FIC & Bond Connect Summit that the government-owned Hong Kong Precious Metals Central Clearing Limited will offer comprehensive services, ranging from gold deposits and withdrawals to over-the-counter transaction settlements in Hong Kong.

The initial gold deposits and the first transaction settlements have been completed, Lee noted, involving multiple banks and their clients, including mining companies, refiners, jewelers, and other investors. He said the establishment is a milestone made possible by the country's support and collaboration among the HKSAR Government, Shanghai Gold Exchange, and 11 financial institutions on the Central Clearing Limited board.

Lee highlighted gold as the key pillar for liquidity and risk management amid geopolitical crises and macroeconomic volatility. He also introduced the first phase of Delivery Connect in partnership with the Shanghai Gold Exchange – a streamlined mechanism for participants that allows them to use gold holdings to settle transactions in both the Hong Kong and Shanghai markets. Lee said three banks are already participating in the initiative, and the two-way transfer will be completed on Tuesday.

He mentioned that the Hong Kong Exchanges and Clearing (0388) has revitalized its US Dollar gold futures contract, and Hong Kong is also planning to develop a new yuan gold futures contract, with delivery support from the Shanghai Gold Exchange. In collaboration with Bloomberg, a new gold price ticker, called HAU, has also been introduced for gold traded and settled in Hong Kong.

HAU will make Hong Kong gold prices accessible globally, Lee emphasized, laying the foundation for a global gold market reference rate and strengthening storage and refining facilities. He also mentioned the HKSAR Government considering tax incentives for eligible gold trading and settlement institutions.

Meanwhile, Lee said that he and the Hong Kong Monetary Authority’s chief executive, Eddie Yue Wai-man, witnessed the signing on Tuesday of a memorandum of understanding between HKEX and the Cross-Border Interbank Payment System, the primary channel for cross-boundary yuan payments and clearing under the People's Bank of China. He said the new collaboration accelerates the development of fixed income and currency in Hong Kong, strengthening Hong Kong's role as a premier offshore yuan center

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