Singapore to establish gold clearing hub with central bank vaulting services

Singapore will establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services, the deputy prime minister said on ​Monday, as the city-state looks to establish itself as a gold ‌trading hub.

The Singapore Exchange will establish an over-the-counter gold clearing system for Loco Singapore, or physical gold stored in Singapore, by the end of this year, Deputy Prime ​Minister Gan Kim Yong told the Asia-Pacific Precious Metals Conference on ​Monday.

Six banks - DBS, Deutsche Bank, ICBC Standard Bank, J.P. Morgan, ⁠OCBC, and UOB - will be clearing members, he said.

The Monetary Authority of Singapore ​will introduce central bank gold-vaulting services by October this year to provide foreign ​central banks and sovereign entities with a secure option to store their gold reserves, Gan said.

"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 said.

The SGX is also exploring a physically deliverable gold futures contract that would ‌enhance price ⁠discovery and risk management in Loco Singapore, he said. The MAS will remove a 5% cap on physical investment in precious metals under tax-incentive schemes for eligible funds and family offices.

The changes emerged from a working group set up ​earlier this year, ​and come amid ⁠a series of moves by local banks to broaden gold trading and as other financial centres look to expand ​into gold services.

In May, Reuters reported that Hong Kong Exchanges ​and ⁠Clearing is also looking to relaunch gold futures, as the city pushes to become an international gold trading and storage hub.

Last week, DBS, Singapore's biggest bank by ⁠assets, said ​it will offer tokenised physical gold to retail ​customers, while competitor OCBC has said it will let institutional and private banking clients buy, sell ​and store physical gold in Singapore.

-Reuters