The P e Pract ctic ice of of and T Thou oughts on on th the S - PowerPoint PPT Presentation

The P e Pract ctic ice of of and T Thou oughts on on th the S Synergy Between E Exchan ange-Traded ed a and O OTC Markets Mr. W Wang ng Zhe henyin ing, P Preside ident Sha hang nghai G Gold E d Excha hange June 10, 10, 2019 2019

An Overview o of Shang ngha hai G Gold E d Excha hang nge With the trend of gold moving from the west to the east and the development of China’s gold market, Shanghai Gold Exchange(SGE) has become one of the key global precious metals trading centers. China: 401 t 401 tons China: 12.3% 26.5% 26.5 World’s largest gold producer, • 1151 1151 importer and consumer. tons Huge supply and demand in silver. • Worl rld T Total: 4345 4345 tons Worl rld T Total: 4260 t 4260 tons In 2018, China’s gold production In 2018, China consumed 1,151 metric registered 401 metric tons, topping the e tons of gold, rankin ing g the he first in the w world ld world ld f for 12 12 consecutiv ive y years. for 6 6 consecutiv ive y years.

In 2018, annual turnover across all markets on aggregate reached ¥ ¥ 21. 21.32 t 32 trillio llion, with year-on-year growth of 9.20%. Go Gold T Tradin ing grew to 67, 67,500 500 metric ic t tons (+24.35% YOY) by volume and ¥ 18.30 trillion by turnover. Trading Volume Bet etter er enabled ed t to s serve t e the r he real econo nomy a and nd optimize r e resource allocation i in 2 2018. 8. Launched Panda Coin, Sliver price asking product, Larger-side margining and other • products & services; Product & Service Trimmed transaction costs including reduced commission fees and deferred interest. • Innovation Advance c e coope peration with i inter ernational exchanges a es and p nd prec ecious s metals i ins nstitutions s such a as CME ME, L , LBMA, MO MOEX, e , etc. c. International Cooperation

A S Synergized ed Excha hang nge-Trade ded a d and O nd OTC Market on on SGE Pl Platform orm London Shangh ghai OTC Ma Mark rket New Yo York Synergized E Sy d Excha hang nge- Excha hang nge-trade ded d trade ded a d and O OTC M Market Mark Ma rket SGE actively exploring market development by adopting the market-driven and internationalization strategy.

The Fledgi ging Syner ergy gy bet etween een Exchange-traded ed and OT OTC Marke kets Sha hang nghai G Gold E d Excha hange 03 03 In 2002, 2002, S SGE GE w was officia ially lly 01 01 Shangha hai F Futur ures Excha hang nge established a and i introduced p price matchin ing t g tradin ing m g mode. In 2008, 2008, SHF HFE i introduced g gold futures c contract. In 2004, 2004, S SGE GE l launched deferred tradin ing p product f for go gold w whic ich bec ecam ame t e the m e majo jor c contract i in 02 02 In 2 2010, a a pattern f n featur uring ng T Two exchange-traded ed m mar arket et. Excha hang nges and d One O OTC m market t took Commer ercial B Banks shape pe . In 2004, 2004, commercia ial b banks s started How t to f further er p promote e the e OTC d derivatives es offerin ing O g OTC g gold tradin ing s servic ices . market has since b e bec ecome t e the e focus f for market partici cipan ants.

GE ： To A SGE Achieve G e Grea eater S Syner ergy gy b bet etween een t the e Exchange-traded ed a and OT OTC Markets a and Enhance M e Market F Functi tions, to to Build a a Wel ell- Regu gulated ed, O Open en, M Multi-tier ered ed M Marketplace “ Ope Platform ” pen Pl In 2010 n 2010, SGE i int ntroduc uced d price a asking ng trading i in r respo sponse se to PB PBoC oC. Six national ministries Diverse trading modes ： (including PBoC) Launched price asking ng t tradi ding ng price matching, price asking... • jointly released contr tracts ts on a trial basis in the document of the e Multiple trading platforms: price 2011. Gui uide deline on the P Promotion matching trading platform, price of Chi hina na’s G Gold d Market . Worked with China Foreign asking trading platform, CFETS… • Exchange Trade System (CFETS) Excha hang nge- to launch inter-ba bank nk g gold + OT OTC bila ilateral t l transactio ion i in 2012 2012. traded

Key ey H Highligh ghts ts 1. Bui uilding ding a a Mul ulti-Leve vel Marke ket System Physical Contract • Spot Contract Panda Coin • • Pr Price ce Gold Go Deferred Contract • Ma Matchin ing g Coin Marke ket Marke ket 2 B Board rds Main Board & International Board Spot • 01 06 Forward Price Asking, Price Matching, • Pr Price ce Leasin ing g 05 02 Swap 6 M Marke kets • Benchmark Pricing, Gold Coin, Askin ing g Marke ket Option • 03 04 Gold ETF, Leasing Marke ket Lending • Leasing between • Price Pr ce 23 23 Hr. 3 . 30 m min. n. Bank & Enterprises Gold Go By 2020, SGE’s price matching market Fix ixin ing Interbank lending ETF TF • and price asking market will cover the Marke ket Marke ket major gold trading hours globally. Shanghai Gold Benchmark •

2. D Diversifying Produc duct O Offering ngs Fully tapping into SGE’s core strength as a physical delivery hub by offering bespoke products and services to the upstream and Promoting the standardization of OTC derivatives trading by downstream enterprises in gold sector attracting trading in OTC market to register and trade on SGE’s A case in point, Bring in gold coin from the platform, and provide one-stop services from trading to clearing. OTC market to the exchange-traded market. In 2018, SGE’s price asking trading volume reached 45,646 tons. SGE Price Asking Market Trading Volume （ metric tons ） 45,646 22,872 17,692 10,236 2,799 978 148 206 2011 2012 2013 2014 2015 2016 2017 2018

3. Expa panding ding M Market P Participa pants Base Covering domestic and oversea market participants from exchange-traded market and OTC market. 260 260 domestic and international 9. 9.98 98 mill illio ion Individual investors members 12,046 046 Institutional investors Customers rs Member er Bro rokera rage Mark Ma rket and OT OTC Licensed currency brokerage Make ker INST. T. Market makers for inter-bank institutions; Traditional OTC price asking market: institutions such as Shanghai Continuously offer bid/ask Gold Coin Company. bilateral prices

4. P Promotin ing P Pric ice D Discovery Ove ver the he past 3 yea ears, go gold asking ng de deriv ivativ ives marke ket pr pric ice “Sha hangha nghai G Gold” Price . move ved in tande dem wit ith the he Shang ngha hai Gold Ben enchmark Pr Bench chmar ark P Price Look to build a Med edium and nd long-te term Go Gold Forward • Benchm hmark pri rice ce sy syst stem (with a maturity from 1 month, 3 months, 6 months and 1 year) in accordance with central bank's latest stability report. “Shanghai Gold Benchmark Price, the first RMB-dominated benchmark price of “ Sh Expand the appli licatio ion scen enarios of Shanghai • trading contract in precious metals, Gold ” benchmar Go mark price into OT OTC der derivatives es and serves as a barometer of international optimize product system. gold market in Asian trading hours.

Thoug ughts o on the S Synergy b bet etween en Excha hang nge-traded a ded and d OTC M C Mar arkets Think f from M Market t Strati tificati tion a and Syner nergy’s P s Perspe spective work with all market participants to build a multi-level and full-service market system together rather than adopt a one-size-fits-all market mode to build a centralized market, Stay F Focused o sed on t the he Top-Lev evel el market ： PBoC issued a set of rules on Gold Seize th the opp pportuni unity in Go Gold mar • Des esig ign of of G Gold old m markets deposits, gold assets, and Internet gold in 2018. Gold deposits, gold assets become a major on-and off-balance sheet items for financial institutions. Pro romote Exchange-tra raded marke ket and nd OT OTC ma market synchronously to to meet et • nds: “People’s Gold” with “ Shanghai Gold ” Benchmark marke ket demands Price.

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