Following is a question by the Hon Robert Lee and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (November 11):
 
Question:
 
     The gold market in Hong Kong has been developing over the past century and involves a large number of industry participants, including the Hong Kong Gold Exchange (HKGE), formerly known as the Chinese Gold and Silver Exchange Society, which has over 100 members, covering traditional financial institutions, retail jewellery or goldsmith shops, as well as small and medium-sized to large multinational gold traders. There are views that the Government should make good use of HKGE's business network and advantages, and expand businesses such as gold investment, trading, storage and logistics, so as to further accelerate the building of an international gold trading market. In this connection, will the Government inform this Council:
 
(1) whether it will draw reference from the development experience of the Hong Kong Exchanges and Clearing Limited, and step up participation in and support for the modernisation of HKGE, so as to facilitate HKGE's development of more standardised products and a more mature mode of operation, thereby enabling HKGE's members to gain more development opportunities;
 
(2) whether it will study expanding the coverage of the permissible type of investment assets under the New Capital Investment Entrant Scheme to include physical gold as an authorised asset which fulfils the required investment threshold under the Scheme; and
 
(3) as it is indicated in the 2026 Policy Address that the Hong Kong Monetary Authority (HKMA) is exploring the possibility of increasing the Exchange Fund's gold holdings and participating in Hong Kong's spot and futures markets, of the latest progress in this regard; whether HKMA will set a target for the amount of additional gold holdings; whether it will increase holdings of Hong Kong-branded physical gold and funds related to physical gold through gold traders operating in Hong Kong?
 
Reply:
 
President,
 
     The Government is committed to developing Hong Kong into an international gold trading market and building a thriving gold trading ecosystem. In July this year, Hong Kong's central clearing and settlement system for gold (the Clearing System) commenced trial operation under the governance of the Hong Kong Precious Metals Central Clearing Company Limited (HKPMCC), a wholly government-owned entity. With 11 banks serving as provisional direct participants, the Clearing System provides the market with efficient and reliable clearing and settlement services for over-the-counter transactions in gold of international standards. Market response during the trial operation has been positive, providing a solid foundation for further development.
 
     To seize the strong momentum in the development of the gold market, the Chief Executive's 2026 Policy Address announced that the Clearing System will be officially launched in the first quarter of 2027. Before its official launch, the Clearing System will be connected with the Real Time Gross Settlement system to enable Delivery versus Payment settlement, seamlessly linking gold trading and physical delivery with Hong Kong's world-class cash clearing and settlement capabilities. The Government is also exploring with the London Bullion Market Association the implementation of co-operation on delivery standards, with a view to incorporating internationally recognised standard into Hong Kong's gold market infrastructure and laying a trusted foundation for market participants to engage in market activities.
 
     Together with a series of supporting measures to promote physical delivery, develop investment products, derivatives and risk management tools, and deepen connectivity with the gold market in the Mainland, we will further enhance the depth and breadth of Hong Kong as an international financial centre and inject new impetus into the development of the financial sector.
 
     In consultation with the Hong Kong Monetary Authority (HKMA), the reply to the three parts of the question is as follows:
 
(1) The Hong Kong Gold Exchange (HKGX) was formerly known as the Chinese Gold and Silver Exchange, a privately operated entity established in 1910. It was subsequently corporatised and restructured in 2025 and adopted its current name. The HKGX operates on the basis of the industry's self regulation, and its members are required to comply with the relevant rules and codes of the HKGX. The Government has maintained communication and liaison with the HKGX on various matters, including its internal governance and member supervision arrangements, and provided liaison support as appropriate during its corporatisation and restructuring process. We will continue to maintain liaison with different market participants and industry bodies, including the HKGX, on the development of the gold market.
 
     In addition, the Chief Executive's 2026 Policy Address proposed that the Government would encourage the sector to establish an industry association for gold. The Financial Services and the Treasury Bureau is assisting the preparatory group in conducting in-depth discussion on details of the industry association, including its composition, membership eligibility and financial arrangements. As gold trading covers a wide spectrum of activities, the industry association will be able to consolidate the views of relevant stakeholders, including the HKGX, and promote collaboration across the full industry chain of the gold trading ecosystem, so as to better integrate with the overall direction of Hong Kong's gold market development, as well as to create and seize the various opportunities in the market.
 
(2) To promote investment activities related to precious metals, the Government has introduced an amendment bill into the Legislative Council to enhance the preferential tax regimes for funds and single family offices. Proposed enhancements include expanding the scope of qualifying investments to cover precious metals. The Government expects that the Second Reading debate on the Bill may resume within this year. If the Bill is passed by the Legislative Council, the relevant amendments will apply from the year of assessment 2025/26 and thereafter. As regards the New Capital Investment Entrant Scheme (New CIES), the Government has, in 2024 and 2025, successively enhanced the scope of permissible investment assets (including relaxing the requirements for real estate investment) and the application arrangements. The Government will continue to keep in view the operation of the New CIES, including the arrangements for permissible investment assets, and will assess its effectiveness in a timely manner.
 
(3) The Chief Executive's 2026 Policy Address announced that the HKMA is exploring the possibility of increasing the Exchange Fund's gold holdings and participating in Hong Kong's spot and futures markets, and gradually transfer its existing physical gold holdings to designated vaults appointed by the HKPMCC. The HKMA is actively taking forward plans for the Exchange Fund to moderately increase its gold holdings and participate in Hong Kong's spot and futures markets. This initiative not only helps diversify risks but also supports the sustained and orderly development of Hong Kong's gold trading ecosystem, further consolidating Hong Kong's position as an international financial centre. The HKMA will actively participate in Hong Kong's gold market through various channels based on market developments and practical needs. However, the HKMA does not comment on the details of specific investment or disclose externally the allocation of the Exchange Fund.

Ends/Wednesday, November 11, 2026
Issued at HKT 11:58

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