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Singapore will launch an over-the-counter clearing system for gold this year, along with a vault service for central banks, as the city-state attempts to establish itself as a global trading hub for precious metals.
Several international banks, including JPMorgan, Deutsche and DBS, will take part in the system, deputy prime minister Gan Kim Yong said on Monday morning.
“We are not seeking to replace established centres of gold trading and liquidity,” he said. “Instead, Singapore can serve as a trusted node in the global gold ecosystem — connecting regional demand with global liquidity and supporting market activity during Asian hours.”
Singapore and its rival Hong Kong are jostling to become Asia’s leading gold market, as the region plays a bigger role in the global trade for precious metals.
The two finance hubs are trying to shake up a business that for decades has centred on bullion being stored, refined and traded in London, New York and Switzerland.
While Singapore’s ambitions have been in the works for more than 10 years, they have been boosted by geopolitical uncertainty that has rejuvenated investor appetite for gold over the past two years.
Most of these efforts — such as the launch of a physical gold contract and opening of huge storage facilities — have been driven by the private sector.
Gan, who is also chair of the Monetary Authority of Singapore, said the clearing mechanism was expected to be in place by the end of this year, with interbank trading to be added next year.
Other banks that have agreed to take part are Singapore’s OCBC and UOB, as well as a joint venture between China’s ICBC and South Africa’s Standard Bank.
“The gold market works best when liquidity and infrastructure are connected across regions,” said Gan. “With an established clearing infrastructure and strong market ecosystem, Singapore can support a more seamless global market across time zones.”
Hong Kong is also in the process of setting up its own gold clearing system.
As part of the Singapore government’s moves, which were proposed in this year’s budget, MAS will set up vaults to allow other central banks to store their bullion in the city-state.
“This strengthens Singapore’s proposition as a jurisdiction where reserve assets can be securely held, actively managed and connected to wider market liquidity during Asian trading hours,” Gan added.
MAS is also removing a 5 per cent cap on tax incentives for physical gold investments for family offices and eligible funds.
