At the opening ceremony of the international headquarters of a precious metals company in Hong Kong on October 13, the Secretary for Financial Services and the Treasury of Hong Kong, Hui Ching-yu, said in his speech that the Hong Kong government is using the development of an international gold trading market as an entry point to promote the coordinated development of trading, clearing, warehousing, refining, insurance, and logistics.
With physical warehousing as the underlying foundation, gold that meets international standards can be cleared and delivered in Hong Kong, injecting new high-value-added growth momentum into finance, trade, and shipping logistics.
He mentioned that the company has been deeply engaged in the precious metals industry for many years, with businesses covering the refining, physical delivery, trading, and related services of metals including gold and silver. Its refining subsidiary is an LBMA Good Delivery and LPPM Good Delivery refiner, and its products such as gold and silver have entered a number of internationally recognized trading and delivery systems.
It is also a liquidity provider for Hong Kong Exchanges and Clearing's US dollar gold futures and actively participates in related market-making and physical delivery business. The opening of the new headquarters is a substantial investment rooted in Hong Kong and also reflects the industry's confidence in Hong Kong as an international precious metals hub.
The outline of the 15th Five-Year Plan explicitly proposed for the first time support for Hong Kong in building a commodity trading ecosystem, and Hong Kong's first five-year plan also proposed using gold as an entry point to build a commodity trading ecosystem. Hui Ching-yu pointed out that refining is an indispensable part of this ecosystem. Gold circulating in the international market and used for trading and delivery must be processed by qualified refiners and must have brand, serial number, and purity records.
Hong Kong currently already has LBMA-recognized refineries serving customers in the Asia-Pacific region; in addition, a number of enterprises with international standard qualifications have expressed interest in establishing a presence in Hong Kong. The authorities are promoting more enterprises with international standard qualifications to set up or expand refining facilities in Hong Kong.
At the same time, Hong Kong's related infrastructure is entering the implementation stage. The Hong Kong gold central clearing and settlement system began trial operation in July this year, with the goal of officially launching in the first quarter of next year. The system is supervised by the Hong Kong Gold Settlement Company, which is wholly owned by the Hong Kong government, and Bank of China (Hong Kong) has been appointed as the clearing institution; the board of the Hong Kong Gold Settlement Company also broadly incorporates opinions from the government, the Shanghai Gold Exchange, regulators, and 11 banks.
The system will in the future connect with the real-time gross settlement system to achieve delivery versus payment and reduce settlement risk. Hui Ching-yu also said that Hong Kong is studying tax concessions for qualified institutions conducting gold trading and settlement in Hong Kong, and is optimizing the preferential tax regimes for funds and single family offices, proposing to expand the scope of qualifying investments to cover precious metals, and is also working with the Financial Services Development Council to launch a gold trading course on a pilot basis within the year to strengthen local talent training.
In addition, Hong Kong has launched the first phase of physical connectivity with the Shanghai Gold Exchange, and the Hong Kong Gold Settlement Company has applied to become an international member, allowing market participants to participate in both markets through two-way transfers and facilitating the flow of physical gold between the two systems. In terms of warehousing, the authorities are promoting capacity expansion by the Hong Kong Airport Authority and financial institutions, with the goal of exceeding 2,000 tonnes within three years and building a regional gold reserve hub.
In the future, Hong Kong will introduce more new policies to maintain the momentum of the gold ecosystem. The Hong Kong government's next step will be to set up a "Gold Express" to provide one-stop assistance to domestic and overseas gold merchants participating in the ecosystem, and to establish a preparatory group to promote the industry's independent establishment and operation of a gold industry association.