(Updating with details on difference between fixing members and reference price members)
London 13/04/2016 – The Shanghai Gold Exchange will launch next week with 12 fixing members and six reference price members, it said on Wednesday.
The 12 fixing members include 10 Chinese banks and two foreign banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Shanghai Pudong Development Bank, China Minsheng Bank, Industrial Bank, Ping An Bank, Bank of Shanghai, Standard Charted Bank (China) and Australia and New Zealand Bank (China).
ANZ (China) is still in the preparatory stages of taking part in the benchmark and will contribute as a fixing member once this process is complete, the SGE noted.
SGE has said it intends to attract the interest of foreign participants by allowing foreign price-setting companies and their clients to trade the contract.
A fixing member is an institution that is obligated to provide reference prices within the designated time period before the start of a centralised pricing-trading session and to assume the responsibility of balancing the buying and selling volumes in connection with centralized pricing-trading, according to the trading rules published by SGE.
Another six companies – China National Gold Group Corp, Shangdong Gold Group, Shanghai Lao Feng Xiang, Chow Tai Fook, Bank of China (Hong Kong) Ltd and MKS (Switzerland) SA – will take part in the benchmark as reference price members.
A reference price member is an institution that is obligated to provide a reference price for the first round of a centralized pricing-trading session within the designated time period before the start of centralized pricing-trading, according to the SGE’s statement.
The main difference between the 12 fixing members and the six reference price members is that the former have the right to submit tendering volumes during supplementary tendering sessions.
But the 12 banks will not be able to reverse the direction of the buy-and-sell volume during these supplementary sessions; instead, the rules suggest that members will look to narrow the imbalance as much as possible, the SGE said.
Any remaining volume imbalance will be divided equally among all fixing members at the conclusion of each centralised pricing-trading session, it added.
(Editing by Mark Shaw)
The post SGE gold benchmark starts with 12 fixing, 6 reference price members appeared first on The Bullion Desk.
Read More
Source: Bullion Desk News
