* SGE says to launch yuan gold fix later this year
* China central bank may approve fix anytime now -sources
* Around 15 Chinese banks expected to participate initially
* Signing up foreign banks could be a challenge
(Adds ICBC interested in London benchmark)
By A. Ananthalakshmi
SHANGHAI, June 25 China plans to launch a
yuan-denominated gold fix by the end of 2015 via the Shanghai
Gold Exchange (SGE), in a move aimed at giving the world's
biggest bullion producer and consumer more influence over
The first public confirmation made by an exchange official
comes after Reuters cited sources in February on the proposal
for the fix to be set through trading on the SGE, the world's
biggest physical bullion exchange.
"We will be introducing a renminbi-denominated fix at the
right moment, we are hoping to introduce by the end of the
year," Shen Gang, SGE's vice president, said at the LBMA Bullion
Market Forum in Shanghai on Thursday.
Shen did not give more details, but sources familiar with
the matter have said that China is expected to receive central
bank approval for the fix soon.
Pan Gongsheng, a deputy governor of the People's Bank of
China (PBOC), said the bank would continue to support "speedy
and healthy growth of the China gold market" and its
Given its leading role in gold, China feels it is entitled
to be a price-setter for bullion and is asserting itself at a
time when the global benchmark, the century-old London fix, is
under scrutiny for alleged price-manipulation.
If the yuan fix takes off, China could compel local buyers
and foreign suppliers to pay the domestic yuan price, making the
London fix less relevant in the world's biggest bullion market.
However, given the yuan is not fully convertible, the two
benchmarks could exist side-by-side globally.
China has been making efforts to liberalise the yuan and
increase its influence in global gold markets. The Bank of China
recently joined the London gold price benchmarking
process, the first Chinese bank to do so, while the Industrial
and Commercial Bank of China Ltd said it too was keen to join
These banks could also join China's yuan gold fix.
The SGE has submitted details of the fixing process, and
rules and regulations for participants, to the PBOC a few weeks
ago, sources familiar with the matter said.
"They may approve it anytime now," said one source, who
declined to be named because of rules on talking to media.
FOREIGN BANKS EYED
After receiving PBOC approval, SGE will work to sign up
Chinese and foreign banks. Around 15 Chinese banks are expected
to participate initially, the source said.
But the yuan fix's success will depend on the participation
of foreign banks, which may be reluctant to join given the
global scrutiny of benchmarks following the manipulation of the
London interbank offered rate.
"It will be hard to join the fix because there are lots of
internal compliance issues. It might take months before we get
everything done in house," said a trader from a global bullion
In a trial run for the fix in April, some foreign banks
participated along with many major Chinese banks.
Details of the fix are yet to be revealed, but sources say
it would be derived from a contract traded on the bourse for a
few minutes, with the SGE acting as the central counterparty.
That could make the process transparent - addressing one of the
big concerns about the London fix.
The yuan fix is the most recent effort by SGE to boost
China's position in the global gold market.
The exchange opened an international bourse in September
2014, allowing foreigners to trade yuan-denominated contracts
for the first time. Australia and New Zealand Banking Group
, Standard Chartered and HSBC are
among the members of the bourse.
(Writing by Himani Sarkar; Editing by Ed Davies)