Hui Ching-yu: Hong Kong's Central Gold Clearing System to be officially launched in Q1 2027; HKMA actively implementing Exchange Fund's increased gold holdings

On November 11, at a Legislative Council meeting, Secretary for Financial Services and the Treasury Hui Ching-yu said in a written reply to a question from lawmaker Li Wai-hung that the Hong Kong Central Gold Clearing and Settlement System (the Settlement System) began trial operation in July this year under the supervision of the Hong Kong Precious Metals Central Clearing System Limited, with 11 banks acting as temporary direct participants to provide the market with efficient and reliable clearing and settlement services for over-the-counter international standard gold trading. Market response during the trial operation has been positive. The Chief Executive's 2026 Policy Address has announced that the system will be officially launched in the first quarter of 2027. Before its official launch, the Settlement System will connect to the Real Time Gross Settlement system to achieve delivery-versus-payment settlement, leveraging Hong Kong's world-class funds clearing and settlement capabilities to achieve seamless linkage between gold trading and physical delivery. The Government is also discussing with the London Bullion Market Association cooperation on implementing qualified delivery standards, integrating internationally recognized standards into Hong Kong's gold market infrastructure. In response to a lawmaker's question on whether the Government would reference the development experience of HKEX to strengthen its participation in and support for the modernization of the Hong Kong Gold Exchange, Hui Ching-yu said that the Hong Kong Gold Exchange, formerly the privately owned Chinese Gold and Silver Exchange Society founded in 1910, was restructured under a corporatized structure in 2025 and renamed to its current name. The exchange operates on a self-regulatory model, and members must comply with the relevant codes. The Government has maintained communication and contact with the Hong Kong Gold Exchange on areas including internal management and member supervision measures, and has provided appropriate liaison support during its corporatized restructuring. In addition, the Policy Address proposed that the Government would promote the industry to establish a gold industry association. The Financial Services and the Treasury Bureau is assisting the preparatory group in conducting in-depth discussions on details including the composition, membership qualifications and financial arrangements of the industry association. The industry association will be able to pool the views of relevant stakeholders including the Hong Kong Gold Exchange, and promote collaboration across the entire industry chain of the gold trading ecosystem. Regarding the proposal to expand the eligible investment asset classes under the New Capital Investment Entrant Scheme to include physical gold, Hui Ching-yu said the Government has submitted an amendment bill to the Legislative Council to optimize the preferential tax regimes for funds and single family offices, including expanding the scope of qualifying investments to include precious metals. The Government expects the second reading debate on the bill to resume within this year, and if passed by the Legislative Council, the relevant amendments will apply to the 2025/26 and subsequent years of assessment. As for the "New Scheme", the Government optimized the scope of eligible investment assets (including relaxing real estate investment requirements) and application arrangements in 2024 and 2025. The Government will continue to review the operation of the "New Scheme", including the eligible investment asset arrangements, and assess its effectiveness in a timely manner. On the latest progress of the HKMA's study on the Exchange Fund moderately increasing its gold holdings and participating in Hong Kong's spot and futures markets, Hui Ching-yu said the Policy Address proposed that the HKMA is studying the Exchange Fund moderately increasing its gold holdings and participating in Hong Kong's spot and futures markets, and will gradually transfer existing gold inventories to designated warehouses of the Hong Kong Gold Clearing Company. The HKMA is actively implementing the moderate increase in gold holdings through the Exchange Fund and participation in Hong Kong's spot and futures markets. In addition to diversifying risks, the relevant work can also help promote the sustained and orderly development of Hong Kong's gold trading ecosystem and further consolidate Hong Kong's position as an international financial center. Hui Ching-yu said the HKMA will, in accordance with the pace of market development and actual demand, actively participate in Hong Kong's gold market through various means, but the HKMA will not comment on individual assets of the Exchange Fund or publicly disclose its allocation details.