Hong Kong Exchanges and Clearing Limited (HKEx) will reintroduce trading of gold futures on the Hong Kong Futures Exchange Limited (Futures Exchange), a wholly-owned subsidiary of HKEx, on 20 October this year.
The gold futures initiative resulted from the policy direction set by the HKEx Board in January this year after the Directors discussed the final report from the consultant appointed by HKEx to study the feasibility of trading commodities derivatives in Hong Kong and considered the consultant’s recommendations. The Futures Exchange offered gold futures trading in the 1980s and 1990s, before HKEx was established. The relaunch of gold futures is in response to the renewed interest in gold.
HKEx’s gold futures market will be an open, competitive and regulated trading platform with products based on the London gold standard, which is popular among Hong Kong and international investors. Potential market participants include individual and institutional investors, bullion dealers, banks and corporations involved in gold businesses. Asian gold market participants will be able to use HKEx’s gold futures to establish or adjust positions in reaction to local and overseas developments during the Asian business day (trading hours will be 8:30 am to 5:00 pm without lunch break, Monday through Friday, excluding Hong Kong public holidays).
Gold futures will be traded in US dollars at HKEx and cash-settled in US dollars, based on the results of consultations with Exchange Participants active in the gold business and their current practices when handling gold trading. Exchange Participants will be required to have US dollar settlement arrangements with the Clearing House before they can access HKEx’s gold futures market.
Key Contract Specifications
The complete contract specifications are attached.
HKEx plans to assist Exchange Participants in introducing gold futures trading opportunities to their customers and potential customers. Details will be announced in due course.
“We aim to develop an Asian liquidity pool for trading of gold futures based on the London gold standard commonly used by international players,” said Calvin Tai, HKEx’s Head of Derivatives Market. “This initiative will expand HKEx’s range of derivatives market products and services to the commodities area.”
“HKEx always takes a long-term view when introducing new products since they often take time to develop, so we do not have any specific volume or open interest targets for gold futures,” Mr Tai added.
Note: All references to the London Gold Fixing prices are used with the permission of The London Gold Market Fixing Limited, which for the avoidance of doubt has no involvement with and accepts no responsibility whatsoever for the underlying product to which the Fixing prices may be referenced.