Chinese Central Bank Sets Its Sights upon Online Gold Market

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The People’s Bank of China (PBOC) is launching new measures to clean up the country’s online gold market, by clearly demarcating the roles of participating institutions as well as raising the threshold of entry for brokerage firms.

Domestic media reports that public comments on the draft version of the “Internet Gold Business Provisional Administrative Measures” (互联网黄金业务暂行管理办法) prepared by PBOC’s Financial Market Department are set to close on 11 May.

The Measures outline a clear demarcation of roles for the online gold market, stipulating that financial institutions be responsible for the provision of gold accounts, as well as the possession of qualifications to serve as market makers on the interbank gold market of the Shanghai Gold Exchange.

Online institutions are now clearly designated as brokerage firms, who are not permitted to provide gold accounts, or clearance, settlement, transaction completion or transfer services.

Online brokerages will be subject to to strict regulations, and will need to possess registered capital of no less than 30 million yuan,  as well as professional staff who are familiar with the gold industry.

Financial institutions will be entrusted for with the selection of online institutions within acceptable risk control boundaries, and be responsible  for the quality of the gold products on which they cooperate.

They will also be responsible for providing quotations on online gold operation products, and the production of product information and promotion material.

The Measures mark the first time that China’s financial authorities have introduced regulations for online gold trading, with more detailed rules expected to follow.

One source from an online gold brokerage said to 21st Century Business Herald that online gold trading has always operated beyond the purview of regulation, and that thew new Measures will help to ascertain and standardise bullion sources.

China’s online gold sector is currently host to at least 20 different platforms employing a variety of business models.

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