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CME Group to Launch New Shanghai Gold Futures Contracts In October

Kitco News

(Kitco News) - Acknowledging China’s growing influence in the world gold market, the world’s leading futures and derivatives exchange is increasing its footprint in the nation and launching two new gold futures products next month.

Subject to regulatory approval, the CME Group said that they plan to launch Oct. 14 two physical gold futures contracts; one will be denominated in U.S. dollars and the other will be denominated in the renminbi. Both contracts will be settled using the Shanghai Gold Exchange (SGE) Gold Benchmark PM Price.

The contract sizes will be 1 kilogram, with the U.S. dollar contract priced in troy ounces and the renminbi contract priced in grams; both contracts will be listed on and subject to the rules and regulations of the COMEX.

Meanwhile, the SGE, the world’s largest physical gold exchange, will launch new T+N contracts these contracts will be linked to COMEX Gold Futures Asia Spot Prices and denominated in renminbi; the contract sizes will be 100 grams.

"We are extremely pleased to collaborate with SGE on these contracts that will bring market participants worldwide increased access to Chinese gold markets," said Derek Sammann, Senior Managing Director, Global Head of Commodity and Options Products, CME Group.  "The Shanghai Gold Benchmark is widely-regarded as the Renminbi-denominated gold benchmark, and the launch of these new gold contracts, combined with our ability to offer both USD and CNH contracts utilizing EBS CNH Benchmark, will create new opportunities for clients who want to access China's physical gold prices alongside our liquid COMEX Gold futures and options."

"The launch of these two new Shanghai Gold futures contracts by CME Group marks a significant step in the internationalization of the Shanghai Gold Benchmark," said Wang Zhenying, President of SGE.  "At the same time, our adoption of CME Group's COMEX Gold Futures Asia reference prices for the settlement of SGE's T+N contracts will provide our domestic market participants with the benefit of the world's most recognized gold futures price as they manage their exposure to the physical gold market, so it's a win-win cooperation between SGE and CME."

According to the CME the new futures are a welcome addition for the gold industry.

In a statement, Zhen Mei, General Manager of Global Markets Department, Bank of China said that these will be a great tool for the industry.

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