New silver trading platform to lift HK's hub (2)

The CGSE will invite five accredited assays to act as the liquidity providers to facilitate smooth trading under the new silver trading platform. President Cheung said that the invited assays will feel attracted to join because the platform can bring many clients to them. Moreover, credit risks in the trading process can be spared as the platform can provide clearing services.

The CGSE is a self-regulated precious metals trading society established in 1910 that consists of 171 member firms; 30 of which are bullion group members. The CGSE launched the "renminbi Kilobar Gold Contract" trading platform in 2011 that facilitated gold trading in the yuan currency for the first time in the city.

However, CGSE President Cheung said that the market response toward the platform is not satisfactory, as the daily transaction value is hovering around 2 to 3 billion yuan, which is less than the expected 5 to 8 billion yuan daily average.

"This may be due to the limited yuan currency volatility that crimps the potential of making profit through arbitrage. Moreover, the limited availability of yuan currency loans in Hong Kong also prevents institutional investors from obtaining yuan-denominated line of credit easily for trading," Cheung added.

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