WEDNESDAY, MARCH 5, 1980
GREEN LIGHT GIVEN FOR A GOLD FUTURES MARKET
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ON THE ADVICE OF THE COMMODITIES TRADING COMMISSION, THE GOVERNMENT HAS APPROVED AN APPLICATION FROM THE HONG KONG COMMODITY EXCHANGE LIMITED TO ESTABLISH A GOLD FUTURES MARKET.
ANNOUNCING THE DECISION TODAY (WEDNESDAY) A GOVERNMENT SPOKESMAN STRESSED THAT THE FUTURES MARKET WOULD NOT COMPETE WITH THE HONG KONG CHINESE GOLD AND SILVER EXCHANGE SOCIETY.
THE SPOKESMAN EXPLAINED: THE SOCIETY DOES NOT CARRY ON TRADING IN FUTURES CONTRACTS AS COMMONLY UNDERSTOOD INTERNATIONALLY. A FUTURES MARKET IN HONG KONG SHOULD COMPLEMENT, RATHER THAN VIE WITH, THE SOCIETY.
EXPLAINING THE DIFFERENCE BETWEEN THE SOCIETY'S OPERATIONS AND THOSE OF A FUTURES MARKET, THE GOVERNMENT SPOKESMAN SAID THAT THE SOCIETY PROVIDED A MARKET IN SPOT GOLD, WITH THE FACILITY TO DELAY A DELIVERY AT A COST WHICH VARIES FROM TIME TO TIME.
ON THE OTHER HAND A GOLD FUTURES CONTRACT SETS FIXED PRICES ON DEFINITE FUTURE DATES WHICH CAN EXTEND FROM BETWEEN ONE MONTH TO 20 MONTHS FORWARD, OR LONGER.
HE ALSO POINTED OUT THAT THE ESTABLISHMENT OF A PROPERLY REGULATED GOLD FUTURES MARKET HERE WOULD FURTHER ENHANCE HONG KONG'S POSITION AS AN INTERNATIONAL FINANCIAL CENTRE.
THE SPOKESMAN EMPHASISED THAT THE DECISION TO ALLOW THE EXCHANGE TO ESTABLISH THE FUTURES MARKET WAS NOT ENCOURAGING SPECULATION.
HE SAID: +FUTURES TRADING IN GOLD ON THE EXCHANGE WOULD MEAN THAT THE REGULATIONS AGAINST SYNDICATED TRADING WOULD CONTINUE TO APPLY, AND LOTS WOULD HAVE TO BE OF SPECIFIED MINIMUM VALUE.+
THIS WOULD MEAN THAT THERE WOULD BE NO SCOPE FOR SMALL INVESTORS, AND THAT LARGE INVESTORS WOULD BE ENCOURAGED TO DEAL +ON A PROPERLY REGULATED MARKET, RATHER THAN WITH FRINGE OPERATORS.+
THE ESTABLISHMENT OF THE FUTURES MARKET WOULD FACILITATE THE RETENTION IN HONG KONG OF A PORTION OF THE VERY SUBSTANTIAL+ BUSINESS NOW PLACED OVERSEAS,
IT WOULD ALSO ATTRACT SOME OF THE INTERNATIONAL BUSINESS FROM OVERSEAS FUTURES MARKETS.
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