The Shanghai Futures Exchange (SFE), one of China's major
futures trading venues, will start gold futures trading on Jan. 9,
the exchange said on Saturday. But the contract size will be larger
than originally expected in order to discourage individual
The contract size will be set at 1,000 grams. In an inquiry that
the SFE distributed earlier this month, the contract size was
listed at 300 gm.
An official with the SFE said the contract size was decided
based on surveys. It is large enough to discourage those individual
investors who lacked the ability to take risks, while also being
useful to institutions.
"We started gold futures trading to provide channels for gold
producers and individual investors to hedge against price
fluctuations," said the official.
The China Securities Regulatory Commission said in a statement
on Friday that it had approved the gold futures.
The launch of gold futures would add to the hedging options for
gold producers against the fluctuating global market, analysts
Gold prices climbed almost 11 U.S. dollars an ounce, boosted by
strong oil prices, weak U.S. economic data and political concerns
following Thursday's assassination of Pakistani opposition leader
An ounce of gold for February delivery added 10.90 U.S. dollars
to settle at 842.70 U.S. dollars on the New York Mercantile
The SFE has said it would impose strict risk controls on gold
futures. It would set a minimum margin requirement of 7 percent of
the contract value and a daily price movement band, probably within
the range of plus or minus 5 percent of the previous settlement
Gold was the second new futures product to be introduced in
China this year. The first was zinc, which launched trading in
Last year, China produced a record 240 tons of gold, up 7.15
percent year-on-year. In the first nine months of this year, it
produced 191.456 tons of gold, up 13.1 percent from the same period
(Xinhua News Agency December 30, 2007)