Hong Kong Plans New Gold-Futures Platform

MarketWatch, Chris Oliver - Hong Kong is on track to kick off a new gold-futures trading platform with settlement in the physical metal next month, marking the emergence of a second exchange in the city offering leveraged bets on the metal's rise.

The Hong Kong Mercantile Exchange, known as HKMEx, said it received regulatory clearance to launch gold-futures trading on May 18, according to a statement by the exchange Wednesday.

Debut trade will include one-kilogram gold contracts denominated in U.S. dollars.

Upon maturity of HKMEx's contracts investors can take physical delivery at a government-operated gold depository located at the city's main airport.

Actual delivery would be helpful for some investors who have specific uses for the metal, while it's also in keeping with the city's growing role as a precious-metals hub, according to HKMEx spokeswoman Aubrey Ho.

Trading volumes in Hong Kong should keep pace with growing demand from across the border, since China lags behind only India in terms of global consumption, the spokeswoman said.

Additional trading products in the pipeline include silver futures, Ho said.

Tokyo and Singapore already play host to gold futures on their commodity markets.

Meanwhile, Hong Kong also supports the trade. Both Hong Kong and Singapore denominate their gold contracts in U.S. dollars and provide settlement in cash.

The new platform will host trade over a 15-hour window starting at 8 a.m. Hong Kong time, serving as a bridge for markets in the U.S. and Europe.

Hong Kong's current gold-futures trading platform, introduced in 2008, operates over a nine-hour window starting at 8 a.m.

“This helps to promote cross-continent trading and boost liquidity,” said HKMEx President Albert Helmig in a statement.

The China Gold & Silver Exchange Society, also in Hong Kong, supports trade in physical gold but doesn't offer futures trading services.