CME Group to launch new Shanghai gold futures contracts
New contracts will be launched on October 14, connecting global market participants to Chinese physical gold markets
12 Sep 2019 | The Asset

Derivatives marketplace, CME Group, has announced the launch of two new gold futures contracts on October 14, pending regulatory approvals.

Designed to connect global market participants to Chinese physical gold markets, these two new financially-settled contracts will be denominated in US dollars and renminbi – Shanghai Gold (USD) futures and Shanghai Gold (CNH) futures, based on the Shanghai Gold Exchange (SGE) Shanghai Gold Benchmark PM Price.

CME Group will be using the EBS CNH Benchmark – 3pm Beijing for US dollar conversion. The contract sizes will be 1 kilogram, with the US dollar contract priced in troy ounces and the CNH contract priced in grams. Both contracts will be listed on and subject to the rules and regulations of the COMEX.

Additionally, SGE, the world’s largest physical gold exchange, will launch new T+N contracts – NYAuTN contracts on October 14. NYAuTN contracts are linked to COMEX Gold Futures Asia Spot Prices and denominated in renminbi. The contract sizes will be 100 grams.

The bilateral product-licensing agreement signed by CME Group and SGE in May, and the launch of these new products, mark a key milestone in promoting cross-market cooperation that will enhance the global liquidity of CME Group’s COMEX Gold futures by aligning with the world’s largest physical gold market in China through SGE.

This will also provide global investors access to China’s physical gold market through CME Shanghai Gold futures while also trading COMEX gold futures for maximum capital and margin efficiencies.

“As one of the world’s leading gold refiners and an approved brand for both SGE and COMEX, this is an exciting opportunity for Metalor,” says Nicolas Carrera, global treasurer of Metalor Technologies SA. “This solution provides a unique hedging tool for China gold exposure.”

“We are extremely pleased to collaborate with SGE on these contracts that will bring market participants worldwide increased access to Chinese gold markets,” says Derek Sammann, senior managing director, global head of commodity and options products, CME Group.

“The Shanghai Gold Benchmark is widely-regarded as the renminbi-denominated gold benchmark, and the launch of these new gold contracts, combined with our ability to offer both US dollar and CNH contracts utilizing EBS CNH Benchmark, will create new opportunities for clients who want to access China’s physical gold prices alongside our liquid COMEX Gold futures and options.”

“The launch of these two new Shanghai Gold futures contracts by CME Group marks a significant step in the internationalization of the Shanghai Gold Benchmark,” says Wang Zhenying, president of SGE. “At the same time, our adoption of CME Group’s COMEX Gold Futures Asia reference prices for the settlement of SGE’s T+N contracts will provide our domestic market participants with the benefit of the world’s most recognized gold futures price as they manage their exposure to the physical gold market, so it’s a win-win cooperation between SGE and CME.”

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