The International Development Of The Shanghai Gold Exchange
As a super-sovereign currency, the gold market has become the most unified financial market in the world. During the internationalisation of the global financial market, the gold market has played an incomparably important role and has become the pioneer in the integrated development of the financial market.
The Shanghai Gold Exchange (SGE) took the lead in the opening-up of China’s financial market. In September 2014, SGE established Shanghai Gold Exchange International (SGEI) and launched the International Board, becoming China’s first factor market open to global investors and the benchmark for the internationalisation of the Chinese market.
Accomplishments Of The International Development Of SGE
1.The trading scale of the International Board has been growing steadily. Since the launch of the International Board, the trading scale has been growing rapidly. In 2018, the International Board recorded a turnover of 1.84 trillion yuan, an increase of 37.77%; gold trading volume was 6,500 metric tons, a rise of 37.09%; and silver trading volume was 21,800 metric tons, representing growth of 195.31%. By the end of July 2019, the turnover of the International Board had reached 1.37 trillion yuan (with still five months of the year to go).
2. Market participants of the International Board have become increasingly diverse. As of August 2019, the International Board has attracted 79 international members and 81 international customers, including large domestic and foreign banks, securities firms and other financial institutions, world- renowned refiners, leading global dealers, and other upstream and downstream customers of the precious metals industry.
3. International co-operation has been comprehensively promoted to seek common development on multiple levels. Taking the International Board as the platform, SGE has actively explored the international market and co-operates with many international exchanges in cross-market business. SGE has signed a Memorandum of Understanding with Hong Kong Exchanges and Clearing Limited (HKEX), Moscow Exchange (MOEX), Budapest Stock Exchange (BSE), among others, and has established communication and exchange channels with Southeast Asia, the Middle East and other markets, seeking all- round co-operation in product development, technological innovation and business expansion. In August 2019, SGE launched the ‘Gold Road’ project, aiming to efficiently bridge the gap between the manufacturing and processing demand of the international gold market and the processing supply capacity of the Chinese gold market, so as to better realise the effective allocation of supply and demand of physical gold globally.
4. The global inﬂuence of Shanghai Gold has increased steadily. In April 2016, SGE launched Shanghai Gold, the first RMB-denominated benchmark price for commodities in China.
In the same year, the launch of the Shanghai Gold Futures Contract at DGCX marked the first time that Shanghai Gold was licensed to be used in the international financial market. In October 2019, the Shanghai Gold Futures Contract will be listed on CME, marking its entry into the mainstream international financial market.
The International Board has attracted 79 international members and 81 international customers.
This also indicates the continuous improvement of the global competitiveness of the Shanghai Gold Benchmark Price in recent years.
5. The import and re-export function of the International Board has become increasingly prominent. Since the launch of the International Board, SGE has been committed to optimising the Customs declaration process, improving logistics efficiency, and enhancing the import and re-export function of the International Board. At present, nearly half of the gold has been imported into China through the International Board.
At the same time, the International Board Certified Vault can also provide convenient storage services for the re-export and processing of gold jewellery. As a result, the International Board has opened up channels for import and re-export for the development of China’s gold industry and has built an integrated market with ample opportunities for international market participants about to enter the Chinese gold market.
Turnover of 1.84 trillion yuan gold trading volume was 6,500 metric tons silver trading volume was 21,800 metric tons
Key Points Of The International Development Of SGE In The Future
1. To further develop the ‘Gold Road’ project and strengthen co-operation among international gold industry chains. Through the storage and logistics services of the International Board trading platform, SGE will continue to serve the co-operation among entities in the international gold industry, facilitate business promotion, optimise business models, and promote the upgrading and transformation of the global gold industry as well as the optimal allocation of capacity.
2. To foster business innovation and build well-known brands of precious metals products such as Shanghai Gold Benchmark Price. SGE will continue to steadily foster business innovation, conduct product research and development, and further enrich the product system so as to meet the diversified demands from international investors. In October 2019, SGE will launch another benchmark price product, Shanghai Silver, and develop derivatives centred on existing RMB-denominated benchmark prices such as the Shanghai Gold Benchmark Price and the Shanghai Silver Benchmark Price, so as to give full play to the price discovery function of the RMB gold market and increase the global influence of the RMB gold market.
3. To explore multilevel international co-operation to jointly promote the prosperity and development of the global gold market. Based on existing international co-operation, SGE will actively carry out research on policies, laws and products related to cross-border co-operation; explore multilevel international co-operation through technical support, product design, standard formulation, personnel exchange, etc.; support the building and development of the overseas gold market, and work with international market participants to promote the prosperity of the global gold market.
Wang Zhenying, Ph. D in Law, Research Fellow, President of the Shanghai Gold Exchange (SGE), Vice Chairman of China Gold Association. Before being appointed as the President of the SGE, Mr Wang Zhenying had been working with different departments in China’s central bank - People’s Bank of China (PBoC), and successively served as the Deputy Director of the Financial Market Management Department and Director of the Financial Survey & Statistics Department of the Shanghai Head Ofﬁce of PBoC.
In 2016, Mr Wang Zhenying published the Principles of Trading Economics, in which he systematically proposed the principles of trading economics, making creative amendments to the mainstream theories of economics. The book is considered to have provided Chinese wisdom and solutions to the evolution of economic theories.