BEIJING: China Banking Regulatory Commission's ( CRBC ) decision to allow banks in China to trade gold futures is widely welcomed by gold traders worldwide.
Analysts opined that the latest move by CRBC to allow qualified domestic commercial banks to trade gold futures as an important step in boosting market liquidity at a time when the precious metal is becoming increasingly popular among investors.
The CBRC has released a circular specifying the terms and conditions under which commercial banks can trade gold futures on the Shanghai Futures Exchange.
Only commercial banks that have already obtained licenses for trading financial derivatives and spot gold will qualify.
The move was particularly welcomed by Chinese commercial banks offering a range of gold linked wealth management products, as they need to trade gold futures to hedge against risks resulting from gold price swings.
Access to the gold futures market would encourage commercial banks to widen their gold product range, gold traders at commercial banks said.
Traders and analysts said the inclusion of commercial banks would greatly expand the depth of the gold futures market, helping to ensure that the futures prices will more accurately reflect the supply and demand conditions.