(Adds SGE gold futures launch, quotes of executives)
By Dominique Patton
BEIJING, Sept 11 CME Group Inc will
launch a physically deliverable gold futures contract in Hong
Kong later this year to capture growing hedging and investment
buying in the Asian region, a senior executive of the exchange
said on Thursday.
The planned launch of CME's 1 kilogram (kg) gold contract
comes as other exchanges in the region are racing to provide a
viable alternative to the metal's global benchmark, which is
under regulatory scrutiny.
China, the world's top gold consumer, also said on Thursday
that its Shanghai Gold Exchange will launch an international
version of its gold futures contracts on Sept. 29.
"Asia needs more tools to manage price risks and it needs
more pricing power," CME's managing director of metals products,
Harriet Hunnable, said at an industry conference in Beijing on
Asia accounted for 63 percent of total consumption of gold
jewellery, bars and coins in 2013, up from 57 percent in 2010,
according to World Gold Council.
Yet the metal's pricing benchmark is the century-old London
gold "fix" - set twice a day by four bullion banks in a
With increased attention from regulators in the wake of
benchmark manipulation in other markets, the London Bullion
Market Association has consulted market participants with the
aim of producing a transparent electronic alternative that
complies with toughened regulatory benchmarking standards.
CME said its new contract will help bring price transparency
to Asia as well as meet growing demand to manage risks and
create trading opportunities for investors looking to arbitrage
between different contracts.
"It's timely, it's relevant," Hunnable said.
The launch of the Shanghai Gold Exchange's international
bourse later this month will also be closely tracked by global
investors as gold is one of the first commodities that China is
opening up to foreign players by allowing them to participate
directly in physical trading and to use offshore yuan.
The bourse will launch three yuan-denominated physical gold
contracts, of 100 grams, 1 kg and the bigger London gold
delivery bar weighing 12.5 kg.
"Our gold market is still very young. We are the biggest
market in the world but our influence in the international
market is still very small," Xu Luode, chairman of the exchange
said at the same conference, adding that the bourse will also
open up its silver and platinum contracts to foreign investors
"But by setting up the international board, we can show that
our country is open."
China's planned global gold exchange has signed up more
members than targeted, as foreign banks, trading houses and
refiners seek direct access to the world's top physical gold
consumer, Reuters reported last month.
The first batch of members include Goldman Sachs,
Australia and New Zealand Banking Group and Standard
Chartered, an official from the exchange said on
Refiners Metalor and Heraeus have also signed up, the
companies have said. HSBC, Standard Bank, Bank
of Nova Scotia and J.P. Morgan are also
interested in participating, sources have said.
The SGE will look at allowing major institutional investors,
who can provide liquidity, to trade in the contract in the
(Additional reporting by A. Ananthalakshmi; Writing by Fayen
Wong; Editing by Kenneth Maxwell and Muralikumar Anantharaman)