SBMA at the Bund Summit 2021: Promoting Global Gold Market Cooperation in the Post-Pandemic EraBy SBMA
Published on December 10, 2021
SBMA CEO Albert Cheng was among the speakers at the 3rd Bund Finance Summit, held in Shanghai on 22-24 October 2021. The conference focused on the development of the global gold market against the backdrop of the pandemic. Here, we present an abridged version of his speech.
The global gold market is at a crossroads: a paradigm shift is inevitable. Singapore an important global bullion trading hub. Physical gold movement in and out of the country reached new highs in 2020. And in the last few years, we have observed an increasing number of big bullion banks, commodity trading houses, foreign fund managers, and financial institutions establishing a presence in Singapore.
The focus and mandate of SBMA in recent years has expanded considerably, and we are now widely acknowledged and recognised as a “super connector” both within and beyond the region. With our growing reputation and profile, we are observing healthy interest among prospective members, especially over the last 18 months, when some may have expected this to slow because of the pandemic. Eleven new members have been added during this period and there is a pipeline of applications in progress.
Beyond serving our members, we are also privileged to be recognised as the voice of the bullion industry by regulators and market development bodies. SBMA was also the industry body that Singapore’s Ministry of Law engaged with on the introduction and subsequent ongoing monitoring and reporting requirements for the “Precious Metals Dealers Prevention of Money Laundering and Terrorism Financing Act”.
All in all, our refocused efforts in the past 6 years speaks of our role in ASEAN, to the collective effort to promote the cooperation of the global gold market in the post-pandemic era. In charting our next course of action for market development, our members have a few wishes that require collective action.
First, the gold market is calling out for a global solution in the form of supply chain integrity, standardised delivery form(s), fungibility, regional reference pricing, clearing, settlement and the need for multiple global vaults other than London for metal can be delivered and securely stored closer to the customers.
The acute situation that we experienced in the first quarter of 2020, which happened at COMEX due to the supply chain crunch because of widespread lockdowns, unavailability of transportation or lack of refining capacity in the right country. Market players found physical gold was neither in the right place or right form to meet demand, despite the abundance of metal in London vaults.
In resolving this situation, Asia played a global role and we saw refineries in Singapore, Hong Kong and Australia providing a large share of production of kilobars to banks and traders for shipment to the United States. This would not have happened in a perfect model.
We believe that a more co-ordinated approach with more collaborative parties is a possible solution. Hence, we support the Gold 24/7 Plan proposed by the World Gold Council and LBMA’s Responsible Sourcing guidelines.
Second, the industry requires a digital gold standard. Digitalisation of the industry is something that is going to happen, and it will help change the way in which we view gold as an asset (and no doubt, other precious metals, or commodities as well). This will help determine how, where, and when it is settled, how it can be used as collateral (greatly improving efficiency e.g., instant title transfer, DVP, etc. Such a standard will benefit both institutional and retail investors.
Third, is attracting newcomers to the profession and to continue educating investors. Getting the right people to the industry is critical as we see the ageing of the current batch of professionals in our industry. However, as good people continue to be attracted to other sectors of the financial markets, fewer juniors are entering our profession. At the same time, gold investment faces competition from many competitive investible products, so a good case for gold and its continued update is critical, and I am pleased that the World Gold Council has been beefing up its efforts towards this initiative.
The future is bright if all global stakeholders are united in achieving our common goals of ensuring transparency, trust, and accessibility, with agreed uniform standards in the global gold market. – Albert Cheng, CEO, SBMA
Conference HighlightsBy Shanghai Gold Exchange
SGE president Wang Zhenying pointed out that gold plays an important role as an international circulating asset in the post-epidemic era. At present, the gold market urgently needs to establish unified standards and a plan. In the future, the gold market must strengthen cooperation in terms of access standards, trading rules and quality standards. Efforts will be made to expand the convergence of interests of all sectors of the gold market and form a new pattern of cooperation in which development and innovation are mutually reinforcing, thus providing new impetus for the development of the market.
David Tait, CEO of the World Gold Council, said that it is promoting the transformation of the gold market to semi-liquidation mode, improve market transparency and trust. It is also actively promoting retail gold investment principles, guidelines and a responsible gold mining industry framework based on digital technology to create a sustainable future for the industry.
In her speech, Ruth Crowell, Chief Executive of the London Bullion Market Association (LBMA), said the Association is committed to promoting the establishment of unified global gold market standards, including delivery standards and standards for responsible gold procurement. It is hoped that by eliminating gold money laundering, enhancing transparency, and building mutual trust in gold, the global gold market will be supported and guaranteed.
Igor Maric, managing director of sales and business development at the Moscow Exchange, said in his speech that the Chinese gold market is a very important partner for Russian exchanges. It is hoped that the two sides will continue to launch new products and services to better meet the needs of investors in the global gold market and strengthen the integration with the international market.
In his presentation, SBMA CEO Albert Cheng pointed out that the gold market needs a global integrated development programme in the form of standardised delivery forms, regional reference pricing, clearing and settlement. Gradually a global digital gold standard will attract more new investors to enter the gold market.
Xu Xiaolan, general manager of the precious metals business department of Industrial and Commercial Bank of China (ICBC), pointed out that China, as an important engine of the global gold market, plays an important role in the post-epidemic era. ICBC is committed to creating a symbiotic, open and win-win market development environment, will strive to explore and provide professional integrated precious metal services for global customers, and work with market participants to open up a new process of high-quality development of the gold market, she said.
In his speech, Lai Changgeng, CEO and President of BNP Paribas (China), said that against the background of the new development pattern and the internationalisation of the RMB, BNF Paribas attaches great importance to the coordinated development of the international gold market, actively helping international investors to enter the fast-growing Chinese gold market and has made great progress.
Gu Wenshuo, Shanghai Gold Exchange (SGE) vice president, discussed the plans and measures taken by SGE in the post-epidemic era to promote the exchange and integration of international and domestic gold markets, how to better integrate and support the development of the gold market, the application and prospects of innovative technology in the gold market, and what opportunities and challenges the gold market will face in the future. He said China’s gold market will build a consensus on development, adhere to openness and cooperation, work hand in hand with everyone to meet all kinds of challenges, actively provide more development opportunities for global participants, and “jointly build a win-win gold market community”.
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