At the annual London Bullion Market Association (LBMA) Bullion Market Forum held for the first time in Singapore today, Mr Lim Hng Kiang, Minister for Trade and Industry, announced a new exchange-traded Singapore Kilobar Gold Contract. This is the first wholesale 25 kilobar gold contract to be offered globally.
Expected to go ‘live’ as early as September 2014, the Contract will introduce centralised trading and clearing of a physically-delivered gold contract in Singapore.
The Contract is the result of a successful collaboration between International Enterprise (IE) Singapore, Singapore Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World Gold Council. Representing the SBMA in this collaboration are four bullion banks, namely J.P. Morgan, Standard Chartered Bank, Standard Merchant Bank (Asia) Limited and The Bank of Nova Scotia.
Asia’s strong demand for physical gold is the key driver for the implementation of the Contract. The World Gold Council reports that, while global consumer demand for gold has increased nearly 50% over the last decade or so, demand for gold in South East Asia has increased by over 250% during the same period. The Contract is another significant development for Singapore following its exemption of Goods and Services Tax (GST) on investment precious metals (IPM) in October 2012.
Metalor Technologies Singapore Pte Ltd (Metalor Technologies) is also officially opening its world class bullion manufacturing and refining facility in Singapore tomorrow, 26 June 2014.
These initiatives are key building blocks in the country’s drive to become a regional precious metals trading hub.
Ng Cheng Thye, President, SBMA, added, “This Contract will help to develop the gold market in South East Asia by creating greater liquidity and opportunities for growth. With a stock and flow of bars guaranteed by the major bullion banks, as well as an exchange open to the key buy-side participants, we believe this will encourage further products to be developed in South East Asia, which are based on this kilobar contract model.”
Source: Commodities Now