Traders: Spot gold exchange requires further study

Traders: Spot gold exchange requires further study

Despite a mutual agreement in principle between the market regulator and gold traders, a gold exchange will not start operating this year, say gold traders after a discussion yesterday.

Mrs Kesara says gold traders have some conditions requiring stakeholder approval. Somchai Poomlard

The Stock Exchange of Thailand (SET) and seven gold futures dealers held a meeting on how to format a spot gold exchange market in accordance with their principles.

The seven dealers – Globlex Holding Management, Classic Gold Futures, GT Gold Bullion, YLG Group, Ausiris, MTS Gold and Hua Seng Heng Commoditas – control 90% of the country's gold trading market in terms of both physical gold and gold derivatives markets.

Gold Traders Association chairman Jitti Tangsithpakdi said even though each GTA member expected gold trading to decline without a local spot gold market, details about trading, the management structure of the exchange and regulation still required further study.

"Building a spot exchange is quite sensitive, so we need to be careful and seriously discuss the matter with all traders," he said.

Mr Jitti said it would take more than six months for an exchange to be ready for operation, but it is essential if Thailand wants to maintain its leading trading position in the region.

Thailand has had the world's fifth-largest gold futures board and been Asean's largest gold importer for two years now, but Singapore last year introduced an unofficial gold exchange that is gaining ground.

Early next month, the SET and the GTA will visit the Shanghai Gold Exchange, a non-profit and self-regulating exchange in China, following a recent visit by the gold traders to Hong Kong's century-old bullion exchange.

"The Hong Kong gold exchange is the largest bullion trading board in Asia-Pacific at 500 times Thailand's trading volume, so we can learn from them," said Mr Jitti.

SET president Kesara Manchusree said her bourse would design the initial model for the new exchange by adapting the operation and management structure of the advanced Chinese markets, but some details would be adjusted to fit Thailand's more liberal environment.

"We expect to see a clear structure for the gold exchange this year," she said, adding that the traders still had some conditions requiring approval from all stakeholders.

Mrs Kesara said the gold exchange was part of plans to develop the commodities and derivatives markets in terms of product variety and trading values.

The idea to set up a spot gold exchange in Thailand was initiated last year by the Bank of Thailand to regulate physical gold trading after it found discrepancies between spot market trades and the US-dollar value of transactions.

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