Your Offshore Guide
Offshore Guide
Gold Trading HK
THE CHINESE GOLD & SILVER EXCHANGE SOCIETY
The Chinese Gold & Silver Exchange Society ("The Exchange"), established in 1918, is predominantly Chinese and employs Chinese weights and measures and local currency as trading units. The Exchange is also known as "Kam Ngan Exchange" which is the translation of "Gold and Silver Exchange". Trading is conducted under an open outcry system and prices are expressed in Hong Kong dollars per tael (1.20337 troy ounces) of gold of 990 fine. Each contract covers 20 five-tael bars and transactions concluded are for same day settlement which can be deferred at the discretion of buyers or sellers subject to the payment or receipt of a Carried Over Charge (COC).
The COC rate normally fluctuates in accordance with the prevailing physical supply and demand for tael bars and is fixed daily at the Exchange at 11:00 hours (10:00 hours on Saturdays). The rate is fixed in HK$ per ten taels.
The COC rates are classified under five grades, each grade with a maximum limit as detailed below:
First Grade - up to 10.8% per annum
Second Grade - up to 14.4% per annum
Third Grade - up to 18.0% per annum
Fourth Grade - up to 21.6% per annum
Fifth Grade - up to 25.2% per annum
When there is a shortage of physical tael bars to meet the demand, the COC rate is fixed at a level at which buyers agree to roll over the open positions by receiving the respective amount of COC for the day. Should demand continue to exceed supply after COC has reached the maximum limit for the First Grade for three consecutive days, the rate will be increased on the fourth day to the Second Grade. If supply remains short, the rate will be increased to the Third Grade and so on until the Fifth Grade maximum limit is fixed.
According to past experience, physical tael bars are always available when the Fifth Grade maximum limit becomes effective. The reverse rates of COC are applicable when the supply of tael bars exceeds demand. Carried Over Charge is not payable until the deal is closed.
In the case of settlement being deferred, the maturity date is not specified. Members are permitted to hold a net open
position of up to 2,500 taels each in their accounts. Should the limit be exceeded, an initial margin of HK$40,000 (noninterest bearing) per contract has to be deposited with the Exchange.
In order to facilitate trading, some members of the Exchange deal among themselves for more than 2,500 taels without depositing the required initial margin with the Exchange. This practice is currently acceptable although members are taking credit risks for the quantity exceeding 2,500 taels. Officially, the risk can be eliminated by transferring the deals to the Exchange but such a course of action would adversely affect working relationships with other members.
The Exchange fixes daily the official clearing price for the morning and afternoon session at 11:30 and 16:00 hours respectively (only one fixing at 10:30 hours on Saturdays). All open positions are marked to market accordingly and variation margin is called and paid
In the event of drastic price movements, the President of the Exchange has the right to suspend trading on the floor when the price movement exceeds HK$500 per tael (either way) compared to the official clearing price fixed at the previous session. All outstanding deals must be closed with the maximum profit or loss of HK$50,000 per contract for immediately settlement. Thereafter, trading will resume with the normal margin calls. Under this practice, the Exchange has been able to conduct gold trading without any major financial problem since its establishment.
There are 192 members on the Exchange of whom 31 are acceptable melters of tael bars. The fineness and weight of the bars produced by these melters are checked by the Exchange. The black touchstone process is employed for testing of the fineness and if the bars conform to the required standard they are stamped with the official chop of the Exchange. Currently, Chow Sang Sang, Hing Fung, King Fook, Lee Cheong, Po Sang Bank and Sun Hung Kai are the leading producers.
The Exchange is recognized by the Hong Kong Government as a semi-official organization for gold trading but its operation is completely independent without any Government interference or supervision. In view of its excellent track record for the past seven decades, the trading practice adopted by the Exchange is well accepted by traders, jewellery manufacturers, hoarders and speculators in Asia. Tael gold bars bearing the official chop of the Exchange are recognized in the region as Hong Kong Good Delivery bars.The Executive and Supervisory Committee of the Exchange comprises 21 members. Mr Henry Wu King Cheong (Lee Cheong) is the current President. Mr Fung Chi Kin (Yue Seng) and Mr Raymond Chan Fat Chu (Hing Fung) are the Vice Chairmen. Mr Siu Kwan Luen (Wai Chong) is the Chairman of the Supervisory Committee. Dr Ho Sin Hang, Dr Ho Tim, Mr Wu Jieh Yee and Mr Zee Kwok Kung are the Honorary Permanent Presidents.
The Chinese Gold & Silver Exchange Society ("The Exchange"), established in 1918, is predominantly Chinese and employs Chinese weights and measures and local currency as trading units. The Exchange is also known as "Kam Ngan Exchange" which is the translation of "Gold and Silver Exchange". Trading is conducted under an open outcry system and prices are expressed in Hong Kong dollars per tael (1.20337 troy ounces) of gold of 990 fine. Each contract covers 20 five-tael bars and transactions concluded are for same day settlement which can be deferred at the discretion of buyers or sellers subject to the payment or receipt of a Carried Over Charge (COC).
The COC rate normally fluctuates in accordance with the prevailing physical supply and demand for tael bars and is fixed daily at the Exchange at 11:00 hours (10:00 hours on Saturdays). The rate is fixed in HK$ per ten taels.
The COC rates are classified under five grades, each grade with a maximum limit as detailed below:
First Grade - up to 10.8% per annum
Second Grade - up to 14.4% per annum
Third Grade - up to 18.0% per annum
Fourth Grade - up to 21.6% per annum
Fifth Grade - up to 25.2% per annum
When there is a shortage of physical tael bars to meet the demand, the COC rate is fixed at a level at which buyers agree to roll over the open positions by receiving the respective amount of COC for the day. Should demand continue to exceed supply after COC has reached the maximum limit for the First Grade for three consecutive days, the rate will be increased on the fourth day to the Second Grade. If supply remains short, the rate will be increased to the Third Grade and so on until the Fifth Grade maximum limit is fixed.
According to past experience, physical tael bars are always available when the Fifth Grade maximum limit becomes effective. The reverse rates of COC are applicable when the supply of tael bars exceeds demand. Carried Over Charge is not payable until the deal is closed.
In the case of settlement being deferred, the maturity date is not specified. Members are permitted to hold a net open
position of up to 2,500 taels each in their accounts. Should the limit be exceeded, an initial margin of HK$40,000 (noninterest bearing) per contract has to be deposited with the Exchange.
In order to facilitate trading, some members of the Exchange deal among themselves for more than 2,500 taels without depositing the required initial margin with the Exchange. This practice is currently acceptable although members are taking credit risks for the quantity exceeding 2,500 taels. Officially, the risk can be eliminated by transferring the deals to the Exchange but such a course of action would adversely affect working relationships with other members.
The Exchange fixes daily the official clearing price for the morning and afternoon session at 11:30 and 16:00 hours respectively (only one fixing at 10:30 hours on Saturdays). All open positions are marked to market accordingly and variation margin is called and paid
In the event of drastic price movements, the President of the Exchange has the right to suspend trading on the floor when the price movement exceeds HK$500 per tael (either way) compared to the official clearing price fixed at the previous session. All outstanding deals must be closed with the maximum profit or loss of HK$50,000 per contract for immediately settlement. Thereafter, trading will resume with the normal margin calls. Under this practice, the Exchange has been able to conduct gold trading without any major financial problem since its establishment.
There are 192 members on the Exchange of whom 31 are acceptable melters of tael bars. The fineness and weight of the bars produced by these melters are checked by the Exchange. The black touchstone process is employed for testing of the fineness and if the bars conform to the required standard they are stamped with the official chop of the Exchange. Currently, Chow Sang Sang, Hing Fung, King Fook, Lee Cheong, Po Sang Bank and Sun Hung Kai are the leading producers.
The Exchange is recognized by the Hong Kong Government as a semi-official organization for gold trading but its operation is completely independent without any Government interference or supervision. In view of its excellent track record for the past seven decades, the trading practice adopted by the Exchange is well accepted by traders, jewellery manufacturers, hoarders and speculators in Asia. Tael gold bars bearing the official chop of the Exchange are recognized in the region as Hong Kong Good Delivery bars.The Executive and Supervisory Committee of the Exchange comprises 21 members. Mr Henry Wu King Cheong (Lee Cheong) is the current President. Mr Fung Chi Kin (Yue Seng) and Mr Raymond Chan Fat Chu (Hing Fung) are the Vice Chairmen. Mr Siu Kwan Luen (Wai Chong) is the Chairman of the Supervisory Committee. Dr Ho Sin Hang, Dr Ho Tim, Mr Wu Jieh Yee and Mr Zee Kwok Kung are the Honorary Permanent Presidents.
Related websites
- Related websites
- Exchange traded_fund
- Getting Gold 1898 book
- The Royal Exchange London
- Diamonds are big in the North