Hong Kong's central clearing and settlement system for gold trading has proceeded smoothly in trial, and the government has received positive feedback from market participants interested in joining when the platform officially launches next year, according to Secretary for Financial Services and the Treasury Christopher Hui Ching-yu.

Hui shared the latest progress with the critical market infrastructure at a news conference on Friday, following the release earlier this week of the special administrative region’s First Five-Year Plan for Economic and Social Development (2026-2030) and the latest Policy Address.

The system has been operating on a pilot basis since early July under the management of the government-owned Hong Kong Precious Metals Central Clearing Co Ltd. Eleven local, Chinese mainland and international banks have joined as provisional direct participants on the company’s board, while dozens of institutions, including miners, refiners, and securities firms, took part in the first batch of trades.

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Noting that the HKSAR government aims to formally launch the gold central clearing and settlement system in the first quarter of 2027, Hui said the trial operation had been “very smooth and also uneventful”.

He said a “material quantum of gold” had already been deposited through the system, adding that authorities had received feedback and inquiries from banks beyond the 11 on the board, indicating genuine interest in joining the ecosystem.

To speed up the development of Hong Kong’s precious metals market, the Policy Address outlined a range of initiatives to build a comprehensive gold trading ecosystem, including the establishment of a dedicated “Gold Hotline” to provide one‑stop support for Chinese mainland and overseas gold traders looking to set up or expand their presence in the city.

“(For) setting up storage or refinery facilities, they need physical land or buildings. At the same time, once their facilities are being built, they also have to go through certain regulatory requirements in terms of safety and others,” Hui said. “That's why this gold hotline has to be set up … in such a way that we can facilitate their landing into Hong Kong.”

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The Policy Address also noted that the Stock Exchange of Hong Kong will launch new renminbi‑denominated and physically settled gold futures contracts.

Hui said that while the world is undergoing momentous changes, not only governments and corporations but also family offices and individual investors are increasingly seeking portfolio diversification. Hong Kong hopes to capitalize on this trend by offering more solutions to better meet the rising global demand on diversified investment.

Separately, the Hong Kong Monetary Authority is exploring the possibility of increasing its Exchange Fund’s gold holdings and participating in Hong Kong’s spot and futures markets.

Financial Secretary Paul Chan Mo-po said on Thursday that the government had observed interest among some central banks in moving part of their gold holdings to Hong Kong amid geopolitical development.

“The move by HKMA is very positive to Hong Kong in terms of not just holding the gold physically, but at the same time giving assurance to the other central banks as to the status of Hong Kong in this aspect,” Chan said.

He added that a larger physical gold presence in Hong Kong would support the development of related financial products, and potentially facilitate connectivity with the mainland, thereby further enriching the city’s financial ecosystem and reinforcing its status as an international financial center.

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Robert Lui Chi-wang, a leader at Deloitte China specializing in public services, said gold is an ideal entry point for Hong Kong to build a commodities trading ecosystem.

He said the development of Hong Kong’s gold market hinges on the coordinated enhancement of storage, pricing, clearing and settlement, as well as the design of gold-related products.

The measures outlined in the Policy Address are expected to improve the liquidity of gold-related assets and attract more traders and financial institutions to establish a presence in Hong Kong, Lui added.

Contact the writer at gabylin@chinadailyhk.com