Chinese Central Bank Targets Online Gold Trading

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The People’s Bank of China is launching new measures to strengthen supervision and regulation of the gold market and standardise gold asset management operations.

On 26 June PBOC’s financial markets department released the “Letter on the Solicitation of Opinions on Provisional Administrative Measures for Gold Accumulation Operations” (关于征求黄金积存业务暂行管理办法意见的函).

PBOC said that gold accumulation operations will be confined to banking sector depository financial institutions, while financial institutions and internet organisations that engage in the agency sale of gold accumulation products are prohibited from providing gold account, clearance, settlement or delivery services.

In China “gold accumulation” (黄金积存) refers to financial institutions opening gold accounts for customers, and recording liabilities for specific volumes of gold deposited by customers within a given timeframe.

The smallest unit for gold accumulation products in China is a single carat.

Under the draft version of the new Administrative Measures only banking sector depository financial institutions will be permitted to engage in gold accumulation operations, and may also entrust other financial institutions or internet organisations to engage in the agency sale of gold accumulation products.

According to figures from Beijing Business Today there are over one hundred online gold wealth management platforms operating in China that provide investors with gold transaction services or gold-based products.

Xue Hongyan (薛洪言), an online finance researcher with Suning Finance, said that the Chinese market was currently host to a wealth of gold wealth management products, almost all of which were based around fluctuations in gold prices.

China’s biggest online companies have all established gold trading platforms, with Alipay teaming up with Bosera Funds in 2014 to launch Cunjinbao (存金宝), and JD Finance teaming up with Huangjin Guanjia (黄金管家) to launch the Jingshengjin (京生金) platform in September 2016.

In the spring of 2017 Tencent’s Tenpay and the Industrial and Commercial Bank of China launched “Tencent Wei Gold” (腾讯微黄金), while G-banker.com provides a one-stop gold platform for retail investors.

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