Singapore to establish OTC gold clearing system, introduce central bank gold-vaulting services

DBS group

Today 02:30

By Jun Yuan   Yong

    SINGAPORE, June 15 (Reuters) - Singapore will establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services, the deputy prime minister said on Monday, as the city-state 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, Deputy Prime Minister Gan Kim Yong told the Asia-Pacific Precious Metals Conference on Monday. 
Six banks - DBS DBSM.SI, Deutsche Bank DBKGn.DE, ICBC Standard Bank [RIC:RIC:SBKJLS.UL], J.P. Morgan JPM.N, OCBC OCBC.SI  and UOB UOBH.SI - will be clearing members, he said.
The Monetary Authority of Singapore 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, Gan said.
"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," 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. The MAS will remove a 5% cap on physical investment precious metals under tax-incentive schemes for eligible funds and family offices.
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 0388.HK 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.

(Reporting by Jun Yuan Yong; Editing by John Mair)
((junyuan.yong@thomsonreuters.com))