The Shanghai Gold Exchange (SGE) specializes in gold, silver, platinum and other precious metals. As part of the deregulation of the Chinese gold market and the end of the 50-year old state monopoly on gold, the SGE was founded in 2002. Its members consist of commercial banks, gold miners, consumer units, refineries and mints.
In 2007, locally incorporated foreign banks were accepted as members. Currently five subsidaries of foreign banks are members of SGE and therefore allowed to trade in gold at this exchange. They include the Standard Chartered Bank and HSBC. In 2008 Chinese commercial banks were allowed to trade gold futures at the Shanghai Futures Exchange if they were members of the SGE.
Transactions are subject to 0.6% commission. Settelement is done through China’s four state-run banks. These are the Agricultural Bank of China, the Construction Bank of China, the Bank of China and the Industrial and Commercial Bank of China.
The Shanghai Gold Exchange is primarily aimed at the jewelry industry. Gold trading takes place in quantities of 1kg or 3 kg and with a purity of 99.95% or 99.99%. Prices are quoted in Chinese yuan. In 2006 the turnover was twice the annual jewelry demand.