Shenzhen Prohibits Unlawful Gold Trading Activities Including Precious Metal Forward Contracts and Deferred Settlement

The Shenzhen Local Financial Regulatory Authority has issued a public notice to further regulate the city's gold market operations, mitigate financial risks, protect consumer rights, and promote the healthy development of the gold sector. The guidance, based on existing laws and regulations, outlines prohibited activities for enterprises, individuals, financial institutions, and non-bank payment providers involved in gold-related businesses.

For enterprises, banned practices include conducting illegal gold transactions such as forward pricing agreements, leveraged trading, and deferred settlement. These often occur through online platforms like WeChat groups, mini-programs, apps, or websites, where clients pay margin to lock in gold prices and settle price differences without physical delivery. Other prohibited actions involve illegal fundraising disguised as gold custody, leasing, or repurchase schemes promising fixed returns; misleading gold investment schemes where consumers buy but do not take physical delivery; and promoting or conducting gold sales via live streams or unauthorized software. Enterprises are also barred from falsely claiming membership with the Shanghai Gold Exchange, using exaggerated marketing language, misrepresenting product materials, or charging hidden fees.

Individuals are prohibited from organizing or participating in illegal gold forward pricing, fundraising, or investment activities. They must not develop, sell, or support illegal gold trading software or apps. Qualified individual investors may engage in gold ETFs or futures through official channels, or purchase physical gold, accumulation plans, or gold-linked wealth products via licensed jewelers or banks.

Financial institutions and non-bank payment providers are forbidden from offering gold services without regulatory approval or备案. They must comply with large and suspicious transaction reporting requirements and avoid serving unlicensed entities or promoting illegal gold activities.

Violations may constitute offenses such as illegal business operations, fraud, pyramid schemes, money laundering, or illicit public fundraising. Authorities will pursue legal action, with criminal cases transferred to police for investigation.