Hong Kong launches gold clearing system to rival London

Hong Kong began trial operations of its central gold clearing system on Tuesday, with Chief Executive John Lee confirming first transactions were completed involving multiple banks, miners, and refiners.chinadailyasia+1
The system, operated by the government-owned PMCC, mirrors London's LBMA infrastructure and launched alongside Delivery Connect, linking Hong Kong's clearing to the Shanghai Gold Exchange.chinadailyasia+1
A new Bloomberg-backed gold price ticker called HAU was introduced, laying groundwork for Hong Kong to contribute a global gold reference rate.chinadailyasia+1

Hong Kong inaugurated the trial operation of its central gold clearing and settlement system on Tuesday, marking the city's most concrete step yet toward challenging London's centuries-old grip on global bullion trading infrastructure.

Chief Executive John Lee Ka-chiu announced at the Hong Kong FIC & Bond Connect Summit that the first gold deposits and transaction settlements had already been completed, involving multiple banks and their clients, including mining companies, refiners, jewelers, and investors.info+2

A Government-Backed Challenge to London

The system is operated by the Hong Kong Precious Metals Central Clearing Company (PMCC), a wholly government-owned entity under the Financial Services and the Treasury Bureau that held its first board meeting in April. Eleven financial institutions sit on the PMCC board, including HSBC , JPMorgan Chase , UBS , ICBC Industrial and Commercial Bank of China Limited, and Bank of China.x+2

The clearing mechanism mirrors London's LBMA infrastructure, settling trades through unallocated gold accounts — a system where traders hold claims on a pool of gold rather than specific numbered bars, enabling faster and cheaper transactions.kucoin+1

Alongside the clearing system, a new mechanism called "Delivery Connect" launched in partnership with the Shanghai Gold Exchange, allowing participants to use gold holdings to settle transactions in both the Hong Kong and Shanghai markets. Lee said three banks are already participating and that two-way transfers would be completed on Tuesday.chinadailyasia+1

Building a Global Gold Ecosystem

In collaboration with Bloomberg, a new gold price ticker called HAU has been introduced for gold traded and settled in Hong Kong, intended to lay the groundwork for the city to contribute a global reference rate for gold.info+1

Hong Kong Exchanges and Clearing has also revitalized its US dollar gold futures contract, while authorities are considering a new renminbi gold futures contract with delivery support from the Shanghai Gold Exchange.info

The city currently holds around 200 tonnes of gold storage capacity and plans to expand that to more than 2,000 tonnes, according to earlier reporting by Bloomberg. The government is also considering tax incentives for eligible institutions conducting gold trading and settlement in Hong Kong, Lee said.cryptobriefing+2

Geopolitical Context

The initiative arrives amid a broader shift in global gold markets driven by geopolitical tensions and central bank demand. As the South China Morning Post reported last week, Hong Kong has long sought to reduce Asia's reliance on Western pricing benchmarks for the precious metal.scmp

"In a world beset with geopolitical crises and macroeconomic volatility, gold is becoming one of the key pillars for liquidity and risk management," Lee said. "If gold is the world's safe haven, then Hong Kong will be its safe harbour."info

Sources (15)