http://www.bloomberg.com/news/2014-...lobar-gold-trading-as-demand-shifts-east.html
Singapore Exchange Ltd. (SGX), Southeast Asia’s biggest bourse operator, will introduce a wholesale kilobar gold contract as the city-state seeks to increase its share of the $18 trillion industry.
The contract for 25 kilograms of 99.99 percent purity may start as soon as September, according to a joint statement from the exchange, the World Gold Council, the government’s trade-promotion body and the Singapore Bullion Market Association. Trading will run for about three hours in the Asian morning.
Singapore is vying with China to boost its presence in physical bullion trading as the industry discusses changes to the century-old fixing benchmark in London and global demand shifts from west to east. Asia accounted for 63 percent of total consumption of gold jewelry, bars and coins last year, up from 57 percent in 2010, according to the council, which plans to hold a meeting next month on changes to the fixing.
“The center of the world for gold consumption is Asia, so it makes sense that the center of price discovery for the physical market moves that way,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. “It’s only going to be positive for Asian gold demand.”
The Singapore government is promoting the city-state as a center for precious metals after removing the 7 percent goods and services tax on investment-grade gold, silver and platinum in October 2012. After the change, the trade in gold in Singapore rose 94 percent to S$35 billion ($28 billion) in 2013 from a year earlier, the groups said in the statement.
‘Heart of Asia’
“This is a timely development given the increased requirements for reference prices to be transparent,” Trade and Industry Minister Lim Hng Kiang said in a speech at the London Bullion Market Association’s conference in Singapore today. “What the bullion industry needs most is a vibrant and robust marketplace within the heart of Asia. With our close proximity to both demand and supply in Asia, I believe that Singapore is well-placed to support the bullion industry.”
China, the world’s biggest consumer and producer, plans to start international gold trading in Shanghai’s free-trade zone in the fourth quarter, a city government official said June 20. The platform by the Shanghai Gold Exchange, the nation’s biggest physical bourse, received approval last week from the central bank to be included in the zone’s banking system.
Gold for immediate delivery sank 28 percent last year, spurring demand across Asia, as prospects for global growth and higher U.S. interest rates reduced the appeal of the metal as a store of value. The precious metal was at $1,311.63 an ounce at 11:29 a.m. in Singapore, up 9.2 percent this year.
New Demand
About 30 percent to 40 percent of new bullion demand comes from the so-called kilobar market, Ng Cheng Thye, chairman of the Singapore Bullion Market Association, told the conference. The kilobar market is currently priced off the London fixing, which is under scrutiny, said Ng.
The contract, which will have no price limits, will trade from 8:30 a.m. to 11:25 a.m. local time, with additional 5-minute, pre-opening and pre-closing sessions. The Singapore Exchange will act as the central clearing house, Lim said.
Metalor Technologies SA is in the final stage of getting good-delivery certification from the London Bullion Market Association for its new gold refinery in Singapore, Chairman Scott Morrison said at the conference. The city-state was chosen as the site for the plant, which will also produce silver, because of its location between China and India, he said. The countries are the world’s largest consumers.
Price Rigging
Precious metals are getting more attention from regulators after price rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks. The U.K.’s Financial Conduct Authority in May fined Barclays Plc after a trader sought to influence the gold fix in 2012.
A new gold mechanism or changes to the current procedure should be based on executed trades rather than submitted quotes, be tradeable and not just a reference price, while data should be transparent, published and subject to audit, the producer-funded World Gold Council said last week. It will hold a meeting on July 7 in London for the industry to discuss changes.
To contact the reporters on this story: Glenys Sim in Singapore at [email protected]; Jasmine Ng in Singapore at [email protected]
To contact the editors responsible for this story: Jake Lloyd-Smith at [email protected] Ovais Subhani
Singapore Exchange Ltd. (SGX), Southeast Asia’s biggest bourse operator, will introduce a wholesale kilobar gold contract as the city-state seeks to increase its share of the $18 trillion industry.
The contract for 25 kilograms of 99.99 percent purity may start as soon as September, according to a joint statement from the exchange, the World Gold Council, the government’s trade-promotion body and the Singapore Bullion Market Association. Trading will run for about three hours in the Asian morning.
Singapore is vying with China to boost its presence in physical bullion trading as the industry discusses changes to the century-old fixing benchmark in London and global demand shifts from west to east. Asia accounted for 63 percent of total consumption of gold jewelry, bars and coins last year, up from 57 percent in 2010, according to the council, which plans to hold a meeting next month on changes to the fixing.
“The center of the world for gold consumption is Asia, so it makes sense that the center of price discovery for the physical market moves that way,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. “It’s only going to be positive for Asian gold demand.”
The Singapore government is promoting the city-state as a center for precious metals after removing the 7 percent goods and services tax on investment-grade gold, silver and platinum in October 2012. After the change, the trade in gold in Singapore rose 94 percent to S$35 billion ($28 billion) in 2013 from a year earlier, the groups said in the statement.
‘Heart of Asia’
“This is a timely development given the increased requirements for reference prices to be transparent,” Trade and Industry Minister Lim Hng Kiang said in a speech at the London Bullion Market Association’s conference in Singapore today. “What the bullion industry needs most is a vibrant and robust marketplace within the heart of Asia. With our close proximity to both demand and supply in Asia, I believe that Singapore is well-placed to support the bullion industry.”
China, the world’s biggest consumer and producer, plans to start international gold trading in Shanghai’s free-trade zone in the fourth quarter, a city government official said June 20. The platform by the Shanghai Gold Exchange, the nation’s biggest physical bourse, received approval last week from the central bank to be included in the zone’s banking system.
Gold for immediate delivery sank 28 percent last year, spurring demand across Asia, as prospects for global growth and higher U.S. interest rates reduced the appeal of the metal as a store of value. The precious metal was at $1,311.63 an ounce at 11:29 a.m. in Singapore, up 9.2 percent this year.
New Demand
About 30 percent to 40 percent of new bullion demand comes from the so-called kilobar market, Ng Cheng Thye, chairman of the Singapore Bullion Market Association, told the conference. The kilobar market is currently priced off the London fixing, which is under scrutiny, said Ng.
The contract, which will have no price limits, will trade from 8:30 a.m. to 11:25 a.m. local time, with additional 5-minute, pre-opening and pre-closing sessions. The Singapore Exchange will act as the central clearing house, Lim said.
Metalor Technologies SA is in the final stage of getting good-delivery certification from the London Bullion Market Association for its new gold refinery in Singapore, Chairman Scott Morrison said at the conference. The city-state was chosen as the site for the plant, which will also produce silver, because of its location between China and India, he said. The countries are the world’s largest consumers.
Price Rigging
Precious metals are getting more attention from regulators after price rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks. The U.K.’s Financial Conduct Authority in May fined Barclays Plc after a trader sought to influence the gold fix in 2012.
A new gold mechanism or changes to the current procedure should be based on executed trades rather than submitted quotes, be tradeable and not just a reference price, while data should be transparent, published and subject to audit, the producer-funded World Gold Council said last week. It will hold a meeting on July 7 in London for the industry to discuss changes.
To contact the reporters on this story: Glenys Sim in Singapore at [email protected]; Jasmine Ng in Singapore at [email protected]
To contact the editors responsible for this story: Jake Lloyd-Smith at [email protected] Ovais Subhani
