Singapore is moving to cement its position as a regional gold trading hub with plans to establish an over-the-counter gold clearing system alongside central bank vaulting services, Deputy Prime Minister Gan Kim Yong said on Monday.
The Singapore Exchange will roll out the OTC gold clearing system for Loco Singapore, or physical gold stored locally, by the end of this year. Six clearing members will take part, including DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC and UOB.
At the same time, the Monetary Authority of Singapore will introduce central bank gold vaulting services by October. The service is designed to give foreign central banks and sovereign entities a secure option to store gold reserves in the country.
“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,” Mr Gan said.
Beyond clearing and storage, Singapore is also looking to deepen its trading infrastructure. The SGX is exploring a physically deliverable gold futures contract aimed at improving price discovery and risk management in the Loco Singapore market.
MAS will also remove a 5 per cent cap on physical investment precious metals under tax-incentive schemes for eligible funds and family offices, a move expected to attract greater institutional participation.
Mr Gan said Singapore would align its market practices with global benchmarks such as the LBMA Good Delivery framework as well as settlement standards used by major exchanges including the Chicago Mercantile Exchange and Shanghai Gold Exchange.
“Such alignment will reduce friction for participants operating across markets, while preserving flexibility to accommodate differences in market structures,” he added.
The measures stem from a working group formed earlier this year and come as global financial centres compete to expand their gold trading ecosystems. Hong Kong Exchanges and Clearing is also exploring gold futures relaunch plans as it pushes for hub status.
Separately, regional banks have been expanding their gold offerings. DBS recently began offering tokenised physical gold to retail clients while OCBC has broadened gold storage and trading services for institutional and private banking customers.
“Asia’s demand for financial services is growing … At the same time, global fragmentation and uncertainty are raising the premium on safe, trusted and credible venues for intermediation,” Mr Gan said.
“Our initiatives will broaden Singapore’s marketplace, so that institutions and companies can manage investments for the long term, preserve value, and transact with confidence.”
Reuters/CNA
