Joseph Chan: Hong Kong will formulate a medium- and long-term roadmap for commodities, advance RMB commodity futures and cross-border connectivity

Joseph Chan, Acting Secretary for Financial Services and the Treasury of Hong Kong, said today (November 4) in a written reply to a lawmaker's question at a Legislative Council meeting that the First Five-Year Plan for Economic and Social Development of the Hong Kong Special Administrative Region (2026-2030) (the First Five-Year Plan for Hong Kong) proposes using gold as an entry point to build a commodities trading ecosystem. The Chief Executive's 2026 Policy Address also formally announced the establishment of a "Commodities Trading Joint Working Group" (Joint Working Group) led by the Secretary for Financial Services and the Treasury of Hong Kong to comprehensively review market opportunities and cross-exchange cooperation opportunities. As a major consumer and import-export market for commodities, the country has enormous demand for commodities. Hong Kong can leverage its unique advantages under "One Country, Two Systems" of being backed by the motherland and connected to the world to enhance the country's pricing influence in the commodities market, while expanding offshore RMB business and promoting the coordinated development of financial, trade and shipping services. Regarding the four parts of the question, after consulting the Hong Kong Monetary Authority, the Securities and Futures Commission of Hong Kong, the Insurance Authority of Hong Kong and HKEX, Chan replied as follows: (1) Members of the Joint Working Group include the Hong Kong Monetary Authority, the Securities and Futures Commission of Hong Kong, the Insurance Authority of Hong Kong and HKEX, and different policy bureaux and departments, as well as institutions such as the Hong Kong Precious Metals Central Clearing System Limited, will be invited to attend meetings as needed. The Joint Working Group held its first meeting in September this year to conduct in-depth discussions on the policy direction for developing commodities trading and to explore important areas such as market trends and Hong Kong's development potential. The Joint Working Group will continue to further follow up on various priority focus projects, conducting a full-industry-chain assessment of Hong Kong's commodities trading, clearing, delivery, warehousing, financing, insurance and risk management. Specifically, the Hong Kong Financial Services and the Treasury Bureau will be responsible for coordinating the overall policy direction and will continue to promote various supporting measures, including studying the provision of tax incentives for qualifying activities in the gold and commodities trading ecosystem; the Hong Kong Monetary Authority will review clearing, settlement and offshore RMB liquidity measures; the Securities and Futures Commission of Hong Kong will continue to optimize the regulatory regime for over-the-counter derivatives to facilitate risk and capital management for gold and other commodities trading; the Insurance Authority of Hong Kong will be responsible for strengthening commodities-related risk management and insurance underwriting capacity; and HKEX will focus on market development, product innovation and cross-exchange cooperation. The Joint Working Group will formulate a medium- and long-term development roadmap for promoting commodities trading in Hong Kong, clearly setting out priority projects and implementation timetables at different stages. The Joint Working Group will also maintain close contact with different stakeholders and market participants, widely gather market opinions, and work together to build an internationally competitive commodities trading ecosystem for Hong Kong. (2) With the progress of RMB internationalization, the influence of the RMB in the commodities market has continued to rise. The Shanghai Gold Exchange launched its first offshore delivery vault in Hong Kong in June 2025 and introduced gold contracts delivered in Hong Kong and denominated in RMB. In addition, HKEX has launched an exchange-traded fund denominated in RMB with gold as the underlying asset, and will announce details of a new gold futures contract denominated in RMB and physically settled within this year, enhancing the RMB's international influence in precious metals pricing. When considering the further development of RMB-denominated commodity futures and options products, in addition to the actual hedging needs of enterprises in the market, the Hong Kong Financial Services and the Treasury Bureau will also consider factors such as market foundation and liquidity, geopolitical changes, technological development and green transition trends, to ensure that the relevant products can develop sustainably in terms of market demand, risk management and operational support. In respect of non-ferrous metals, the Hong Kong Financial Services and the Treasury Bureau will fully leverage Hong Kong's unique advantage in the London Metal Exchange's global warehouse network to drive the coordinated development of commodities-related trading, risk management and financing businesses. In respect of green energy, HKEX's Core Climate has successfully completed the first cross-border pilot program for Chinese renewable energy green electricity certificates (green certificates), facilitating 15 enterprises to complete transactions of about 100,000 green certificates; and has signed a cooperation agreement with the Guangzhou Power Exchange Center to jointly promote the further development of the green certificate market and broaden the international use scenarios of green certificates. In addition, Core Climate will also gradually explore the possibility of providing green energy and other environmental rights products to the market, and work with industry stakeholders to study suitable solutions to better serve enterprises' emission reduction needs. The Hong Kong Financial Services and the Treasury Bureau will continue to study enriching the diversity of RMB-denominated and settled commodity futures and options products, and will announce the latest progress in due course. In respect of improving supporting arrangements such as RMB settlement and collateral, HKEX's clearing houses have accepted Chinese government bonds as eligible non-cash collateral since November, which will help accelerate the pace of RMB internationalization, attract more relevant domestic and overseas producers, traders and investors to expand business in Hong Kong, and establish ecosystems for relevant commodities. The Hong Kong Monetary Authority also launched the RMB Business Facility last year to provide banks with stable, lower-cost RMB funds. The total quota of the RMB Business Facility was increased to RMB500 billion in July this year, with nine-month, two-year and three-year tenors added, to meet market development needs, provide sufficient RMB liquidity in a timely manner, and support broader use of the RMB in the real economy. (3) and (4) The mutual market access mechanism between the commodity futures markets of the two places is a long-term policy objective. On the basis of existing cross-exchange product cooperation, the Hong Kong Financial Services and the Treasury Bureau will actively explore, under the premise of controllable risks and compliance with the regulatory requirements of both places, drawing on the successful experience of existing mutual market access mechanisms, studying ways to further promote the coordinated development of the commodity futures markets of the two places. HKEX launched the "Shanghai Hot-Rolled Coil Contract" on the London Metal Exchange in October this year, expanding the international application scenarios of mainland prices and enhancing the international influence of Chinese futures. The Securities and Futures Commission of Hong Kong and HKEX will continue to strengthen communication with relevant mainland regulatory authorities to explore arrangements for various futures market mutual access mechanisms. While promoting the development of the commodities trading ecosystem, the Hong Kong Financial Services and the Treasury Bureau will also continue to deepen cooperation with "Belt and Road" countries and other international market participants, and, in response to market demand and feasibility, study how to better connect commodity buyers and sellers in different markets, fully leveraging Hong Kong's role as a "super connector" and "super value-adder" to further enhance the depth and breadth of the Hong Kong market.