Remarks by SFST at agreement signing ceremony with Shanghai Gold Exchange
Following is the speech by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the agreement signing ceremony with the Shanghai Gold Exchange at the Asian Financial Forum today (January 26):
Deputy Governor Zou (Deputy Governor of the People's Bank of China, Mr Zou Lan), Vice Mayor Wu Wei (Member of the Standing Committee of the Communist Party of China (CPC) Shanghai Municipal Committee and Executive Vice Mayor of the Shanghai Municipal People's Government, Mr Wu Wei), Director Zhou (Executive Deputy Director of the Office of the Financial Commission of the CPC Shanghai Municipal Committee, Mr Zhou Xiaoquan), Chairman Yu (Chairman of the Shanghai Gold Exchange, Mr Yu Wenjian), distinguished guests, ladies and gentlemen,
It is a great privilege to address you today at the Asian Financial Forum. As we convene in Hong Kong, the world's leading international financial centre, we just now witnessed a defining milestone in the development of our gold market as highlighted by the previous two keynote speeches, with my bureau and the Shanghai Gold Exchange signing a landmark co-operation agreement.
Gold has long been regarded as a cornerstone of the global financial system. Its unique physical attributes, inherent scarcity, and proven safe-haven function make it irreplaceable in areas such as national reserves, asset allocation and diversification. In recent years, amid heightened geopolitical uncertainty, inflationary pressures, and ongoing restructuring of the international monetary system, the strategic importance of gold has become even more pronounced. Against this backdrop, deepening co-operation between Hong Kong and Shanghai in the gold sector carries profound significance.
The agreement just now signed is far more than a formal document. It represents a resolute commitment to advancing the synergistic development of Hong Kong and Shanghai as premier international financial and gold markets. It reflects our joint determination to deepen the integration and complementary strengths of Hong Kong and Shanghai, so that together we can expand our share and influence in the global gold market, and better support Renminbi (RMB) internationalisation. Guided by the principles of mutual learning, win-win co-operation, interconnectivity, mutual recognition and shared development, we will leverage the distinctive advantages of both markets to enhance transaction and delivery efficiency, and elevate our voice in international gold pricing and governance.
Two elements of this agreement stand out as particularly significant and forward-looking. First, we are establishing a high-level, collaborative governance structure for Hong Kong's new gold central clearing system. The Hong Kong Precious Metals Central Clearing Company Limited - wholly owned by the Government - will have its Board chaired by myself, while a representative from the Shanghai Gold Exchange will serve as Deputy Chairman. In that capacity, representative of the Shanghai Gold Exchange will actively participate in the Board, contributing to the preparation of the gold central clearing system, the formulation of rules, the admission of participating institutions, and the provision of expert advice on system design, risk management and other areas.
Second, we are opening exciting new avenues for physical infrastructure synergy and market interconnectivity. Our two sides will explore leveraging the Shanghai Gold Exchange's well-established physical warehousing management regime to provide secure gold management services for participants in both the Hong Kong and international markets. Building on this foundation, we aim to drive greater connectivity between on-exchange and off-exchange gold trading activities. Through the central clearing system and key participants in the emerging Hong Kong gold trading ecosystem, we will explore practical measures to deliver greater business convenience and technical alignment, enabling investors from both sides to participate more seamlessly and cost effectively in each of our own markets. These initiatives will create a truly integrated, efficient and open ecosystem that serves participants across both markets.
This co-operation agreement sits within a broader, holistic vision for Hong Kong's gold market ecosystem - one that we are developing with determination and strategic coherence, where every measure is purposefully designed to build trust among global participants and promote innovation in products, infrastructure, and practices.
We are actively supporting the Airport Authority Hong Kong and financial institutions to establish advanced gold storage facilities - building trust through secure and scalable custody solutions, while promoting innovation in logistics and physical flows. The target is to exceed 2 000 tonnes of storage capacity within three years, making Hong Kong a trusted global vault. The Airport Authority has already launched a project to expand warehousing to a thousand-tonne scale, catering to local storage, delivery and also transit requirements.
We have also strengthened regional linkages through a Memorandum of Understanding signed between my bureau and our Shenzhen counterpart - building trust via clear policy guidance, and promoting innovation in GBA (Guangdong-Hong Kong-Macao Greater Bay Area) supply chain integration - which provides solid support for Hong Kong gold traders to co-operate with qualified Shenzhen refining enterprises in processing trade, unlocking new value in the supply chain.
On trading and clearing, Hong Kong's government-led central clearing system for gold is on track to begin trial operations this year - building trust through enhanced transparency, robust risk mitigation, and a reliable settlement mechanism in line with global best practices, while promoting innovation in efficient market operation.
For the preferential tax regimes offered to funds and single family offices, the Government will propose including precious metals as qualifying investments. The target is to introduce the legislative proposal in the first half of this year.
We are also expanding the range of investment options - building trust with reliable, accessible vehicles backed by physical assets, and promoting innovation at the intersection of traditional and digital finance. This week, a new gold fund will list in Hong Kong. Its key features include leveraging Hong Kong's well-established gold infrastructure for physical gold trading and storage, with the option of physical gold redemption at bank. Also, the issuer plans to explore an unlisted share class for potential distribution through licensed digital asset exchanges.
Furthermore, at a gold-themed session later today at this forum, market participants will release an outlook on the development of Hong Kong's sustainable gold governance framework and standards, with a view to fostering sustainable sourcing, environmental protection, and long-term responsibility standards.
Distinguished guests, ladies and gentlemen, the signing of an agreement with the Shanghai Gold Exchange marks the dawn of a new chapter - one in which Hong Kong and Shanghai join forces to shape the future of global gold markets. Let us embrace this historic opportunity to build stronger bridges, ignite innovation and create enduring value for investors and economies alike. Thank you.
Remarks by SFST at agreement signing ceremony with Shanghai Gold Exchange Source: HKSAR Government Press Releases
