Recently, the launch of new gold market initiatives by Hong Kong Exchanges and Clearing Limited (HKEX), such as USD-denominated gold futures and the HAU (Hong Kong Gold) contract, has seen active participation from several Chinese securities firms. By coordinating with their Hong Kong subsidiaries, these firms have achieved multiple breakthroughs in areas including first-day trading, initial clearing and settlement, and selection as active market makers.
Wang Hongying, President of the China (Hong Kong) Financial Derivatives Investment Institute, commented on the trend, stating, "The active involvement of Chinese brokerages in building Hong Kong's gold market helps meet the physical circulation and investment trading demands of the domestic and international gold industry. This not only consolidates and enhances Hong Kong's status as an international financial center but also helps these firms improve their comprehensive service capabilities in the global commodities and derivatives markets. It allows them to better serve the diverse needs of cross-border clients and accumulate experience for future participation in broader international financial market competition."
Initial Trading Activities Concentrate
On July 6, HKEX's gold futures contracts achieved a record high daily trading volume of 6,676 contracts during the daytime session. On that day, subsidiaries of Chinese brokerages such as China Galaxy International and CITIC Securities International were selected as among the first batch of active market makers for HKEX's USD gold futures and successfully participated in trading these contracts. This participation aids HKEX in enhancing its gold product ecosystem and optimizing the market structure.
On July 7, the Hong Kong Gold Central Clearing and Settlement System commenced trial operations, simultaneously launching a new HAU price code to reflect a specific Hong Kong market gold reference price. Regarding participating institutions, information from the Hong Kong Financial Services and the Treasury Bureau's website shows that the first batch of participants in the trial includes several brokerages such as CITIC Securities, CITIC Securities International, China Galaxy International, Bank of China International, GF Global Capital, Haitong International Securities, and Oriental Securities.
On the same day, subsidiaries of multiple Chinese brokerages, including CITIC Securities International, China Galaxy International, and CITIC Securities International, successfully executed their first HAU gold trades and clearing operations.
CITIC Securities stated that its approval as a liquidity provider for HKEX's gold futures and the completion of first-day HAU trading mark a significant milestone in perfecting its global precious metals business system. The company has long been deeply involved in precious metals and commodities, possessing full-chain service capabilities including market-making, over-the-counter derivatives, and product design across domestic and international markets. Looking ahead, the company will continue to leverage its professional strengths, deepen its involvement in Hong Kong's gold market development, focus on the needs of corporate and institutional clients, and offer comprehensive precious metals financial solutions integrating hedging, asset allocation, and risk management.
New Business Opportunities Emerge
In recent years, Hong Kong has actively promoted the development of an international gold trading center, aiming to enhance its pricing power and influence in the global gold market. As key intermediaries in the financial markets, securities firms are poised to find a broad stage for business expansion in this process.
Zhang Pengyuan, a researcher at Shenzhen Paipaiwang Fund Sales Co., Ltd., highlighted the potential benefits for Chinese brokerages from Hong Kong's push to become an international gold trading hub. He noted several business opportunities: First, as HKEX gold futures traders, brokerages can generate significant revenue through market-making and trading services. Second, Chinese firms can extend their service chains by leveraging cross-border linkages to provide services like cross-border hedging, warehouse receipt financing, and physical delivery solutions for gold mining and jewelry companies. Third, brokerages can enhance their offshore asset allocation offerings by issuing USD-denominated gold ETFs and structured products, while also expanding capital intermediary businesses like cross-border gold lending. Finally, they can strengthen their international brand presence by leveraging Hong Kong's status as a global financial center.
To seize these development opportunities, several brokerages have indicated they will further strengthen their precious metals businesses. China Galaxy stated that the company has long been focused on FICC (Fixed Income, Currencies, and Commodities) businesses and is an active market maker and trader in domestic gold spot, derivatives, and ETFs. The firm plans to further enhance its cross-border FICC financial service capabilities to provide professional gold trading and risk management services to global investors. CITIC Securities International also expressed its intention to continue strengthening its cross-border precious metals business and enriching its product and service offerings.
In Zhang Pengyuan's view, cross-border precious metals business holds considerable strategic value and promising prospects for Chinese brokerages. Specifically, focusing on this business helps brokerages further完善 their FICC business systems, strengthen service capabilities, and increase loyalty among institutional and corporate clients. Simultaneously, this business is less affected by stock market volatility, contributing to more stable performance. In the long term, the business has vast growth potential and could create new profit centers for brokerages' intermediary businesses.
However, it is also recognized that compared to mature international investment banks, Chinese brokerages still have room for improvement in their service capabilities in areas like gold futures. Regarding this, Wang Hongying noted that Chinese brokerages need to continuously strengthen their comprehensive investment and risk management capabilities and improve their cross-asset-class协同 service levels. Furthermore, in the complex trading environment involving multiple currencies and assets, they need to enhance the联动 efficiency of their global business networks and the support capabilities of their technological platforms. This will enable them to provide more stable and efficient comprehensive financial services to global clients while effectively controlling risks.
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