Wealth turns east: SGX forays into gold trading with bullion contract launch

The world’s first 25 kilobar gold contract is here.

Singapore laid its stake in the USD18 trillion gold industry. At the annual London Bullion Market Association (LBMA) Bullion Market Forum held in Singapore today, Minister for Trade and Industry Lim Hng Kiang announced a new exchange-traded Singapore Kilobar Gold Contract.

According to a release by SGX, this is the first wholesale 25 kilobar gold contract to be offered globally and is expected to go live as early as September 2014.

“The Contract will introduce centralised trading and clearing of a physically-delivered gold contract in Singapore. With this Contract, global suppliers of gold are able to connect more effectively with their Asian clientele. The Contract comprises a series of six daily contracts, which will give physical users access to competitively-priced kilobars,” the SGX stated.

Here’s more from SGX:

The Contract is the result of a successful collaboration between International Enterprise (IE) Singapore, Singapore Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World Gold Council.

Representing the SBMA in this collaboration are four bullion banks, namely J.P. Morgan, Standard Chartered Bank, Standard Merchant Bank (Asia) Limited and The Bank of Nova Scotia.

Commenting on the significance of the announcement, Minister Lim said, With our close proximity to both demand and supply in Asia, “I believe that Singapore is well-placed to support the bullion industry, with substantive mutual benefits." 

"Our vision is that Asia can be a driving force to continue the growth of the bullion industry, and be a global leader in areas fundamental to the demand and trade in this region.”

Asia’s strong demand for physical gold is the key driver for the implementation of the Contract. The World Gold Council reports that, while global consumer demand for gold has increased nearly 50% over the last decade or so, demand for gold in South East Asia has increased by over 250% during the same period.

The Contract is another significant development for Singapore following its exemption of Goods and Services Tax (GST) on investment precious metals (IPM) in October 2012.

Metalor Technologies Singapore Pte Ltd (Metalor Technologies) is also officially opening its world class bullion manufacturing and refining facility in Singapore tomorrow, 26 June 2014. These initiatives are key building blocks in the country s drive to become a regional precious metals trading hub.