Shanghai Gold Exchange Expands Trading Collateral to Help Volume

  • Investors allowed to use gold as collateral from this month
  • Collateral will expand to silver, forex and securities

The Shanghai Gold Exchange, the world’s largest physical bullion marketplace, plans to expand trading collateral to precious metals, foreign exchange and securities from local currency now, according to statements posted on its website Thursday. The move is designed to “boost market services,” it said.

Starting Sept. 29, trading members will be allowed to use certified gold bars as margin to open contracts, the exchange said in a statement dated Aug. 25. The eligible assets will extend to silver, foreign currency, yuan-denominated stocks and bonds and other securities, according to a separate statement.

China is trying to build its pricing power in gold and challenge the dominance of London and New York. The Shanghai Gold Exchange is in discussions with CME Group Inc. about mutual listing of contracts, its vice president said in June, after the bourse last year allowed foreign investors to trade gold in the country.

The move aims to “increase volumes and attract more investors from other markets,” said Jiang Shu, chief analyst at Shandong Gold Financial Holdings Capital Management Co. The exchange will exempt members from fees for gold collateral until the end of March, it said.

— With assistance by Alfred Cang

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