Monday, March 24, 2008

Chinese Commercial Banks now Allowed to Trade Gold Futures

While the Shanghai Futures Exchange (SFE) had been allowed to trade gold futures as of January, the same wasn't true for commercial banks in China, which had been barred from doing so.

That has changed now, as the China Banking Regulatory Commission (CBRC) announced commercial banks will now be allowed to sell gold futures under specific guidelines, within their domestic market.

One of the key requirements commercial banks in China must adhere to, is they must have a "capital adequacy ratio of more than 8 percent" in order to even apply for a trading permit. They also must have the necessary qualifications to trade in derivative markets to enter the field.

According to the CBRC, the reasonse for the qualifications is to protect Chinese banks, who have no experience in trading futures.

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