Shanghai Gold Exchange
Shanghai Gold Exchange Shanghai Gold Exchange

(REUTERS) -- The Shanghai Futures Exchange (SHFE), China's biggest metals bourse, will lower trading margins for gold and revise its tiered margin system from March 1 to make it cheaper for investors to trade.

The SHFE, which sets different margin requirements based on a tiered volume system, had raised the ceiling that qualifies for the lowest margin requirement of 7 percent to 160,000 lots, up from 80,000 lots, it said in a statement on its website.

Investors holding between 160,001 and 200,000 lots will only need to put up a margin of 8 percent under the revised regulations, down from 12 percent.

The revision will substantially reduce the proportion of collateral investors have to put up as the SHFE seeks lure back members from the rival Shanghai Gold Exchange and re-establish the relevance of its bullion contract.

The margin requirement - the minimum amount of cash investors must keep on deposit - for gold futures will fall to 10 percent from 15 percent for the first trading day of the month before delivery month, the SHFE said.

It has also lowered the collateral requirement to 20 percent from 40 percent for the last two days before the final trading day of the contract.

Trading volumes for SHFE's most active gold futures contract have trailed behind the rival gold exchange's Au(T+D) forward contract, as shorter trading hours and higher trading costs keep investors at bay.

The SHFE has previously said that it planned to introduce night trading for gold futures to boost liquidity and to with the global network of commodities exchanges.