Singapore to establish OTC gold clearing system, introduce central bank gold-vaulting services
MAS will remove a 5 per cent cap on physical investment precious metals under tax-incentive schemes for eligible funds and family offices
File photo of gold bars. (Image: iStock)
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SINGAPORE: Singapore will establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services, Deputy Prime Minister Gan Kim Yong said on Monday (Jun 15), as the country looks to establish itself as a gold trading hub.
The Singapore Exchange will establish an over-the-counter gold clearing system for Loco Singapore, or physical gold stored in Singapore, by the end of this year, Mr Gan told the Asia-Pacific Precious Metals Conference on Monday.
Six banks – DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC and UOB – will be clearing members, he said.
The Monetary Authority of Singapore (MAS) will introduce central bank gold-vaulting services by October this year to provide foreign central banks and sovereign entities with a secure option to store their gold reserves, Mr Gan said.
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“This strengthens Singapore’s proposition as a jurisdiction where reserve assets can be securely held, actively managed, and connected to wider market liquidity during Asian trading hours,” Mr Gan said.
The SGX is also exploring a physically deliverable gold futures contract that would enhance price discovery and risk management in Loco Singapore, he said. MAS will remove a 5 per cent cap on physical investment precious metals under tax-incentive schemes for eligible funds and family offices.
Mr Gan said that Singapore will align its market practices with relevant global standards, such as the LMBA Good Delivery framework for large bars, as we as well as delivery and settlement standards adopted by major exchanges such as the Chicago Mercantile Exchange and Shanghai Gold Exchange for kilobars.
“Such alignment will reduce friction for participants operating across markets, while preserving flexibility to accommodate differences in market structures,” he added.
The changes emerged from a working group set up earlier this year, and come amid a series of moves by local banks to broaden gold trading and as other financial centres look to expand into gold services.
In May, Reuters reported that Hong Kong Exchanges and Clearing is also looking to relaunch gold futures, as the city pushes to become an international gold trading and storage hub.
Last week, DBS, Singapore’s biggest bank by assets, said it will offer tokenised physical gold to retail customers, while competitor OCBC has said it will let institutional and private banking clients buy, sell and store physical gold in Singapore.
“Asia’s demand for financial services is growing … At the same time, global fragmentation and uncertainty are raising the premium on safe, trusted and credible venues for intermediation,” said Mr Gan.
“Our initiatives will broaden Singapore’s marketplace, so that institutions and companies can manage investments for the long term, preserve value, and transact with confidence.”
Source: Reuters/CNA/ec
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