General Announcement::Singapore Kilobar Gold First In The World To Trade On Exchange Platform

Issuer & Securities

Issuer/ Manager
SINGAPORE EXCHANGE LIMITED
Securities
SINGAPORE EXCHANGE LIMITED - SG1J26887955 - S68

Announcement Details

Announcement Title
General Announcement
Date &Time of Broadcast
25-Jun-2014 09:50:26
Status
New
Announcement Sub Title
Singapore Kilobar Gold First In The World To Trade On Exchange Platform
Announcement Reference
SG140625OTHRGSM8
Submitted By (Co./ Ind. Name)
Joan Lew
Designation
Vice President
Description (Please provide a detailed description of the event in the box below)
1. At the annual London Bullion Market Association (LBMA) Bullion Market Forum held for the first time in Singapore today, Mr Lim Hng Kiang, Minister for Trade and Industry, announced a new exchange-traded Singapore Kilobar Gold Contract ( Contract ). This is the first wholesale 25 kilobar gold contract to be offered globally.

2. Expected to go live as early as September 2014, the Contract will introduce centralised trading and clearing of a physically-delivered gold contract in Singapore. With this Contract, global suppliers of gold are able to connect more effectively with their Asian clientele. The Contract comprises a series of six daily contracts, which will give physical users access to competitively-priced kilobars. The Contract is the result of a successful collaboration between International Enterprise (IE) Singapore, Singapore Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World Gold Council. Representing the SBMA in this collaboration are four bullion banks, namely J.P. Morgan, Standard Chartered Bank, Standard Merchant Bank (Asia) Limited and The Bank of Nova Scotia. (Please see Annex for factsheet with details of the Contract).

3. Commenting on the significance of the announcement, Minister Lim said, With our close proximity to both demand and supply in Asia, I believe that Singapore is well-placed to support the bullion industry, with substantive mutual benefits. Our vision is that Asia can be a driving force to continue the growth of the bullion industry, and be a global leader in areas fundamental to the demand and trade in this region.

4. Asia s strong demand for physical gold is the key driver for the implementation of the Contract. The World Gold Council reports that, while global consumer demand for gold has increased nearly 50% over the last decade or so, demand for gold in South East Asia has increased by over 250% during the same period. The Contract is another significant development for Singapore following its exemption of Goods and Services Tax (GST) on investment precious metals (IPM) in October 2012. Metalor Technologies Singapore Pte Ltd (Metalor Technologies) is also officially opening its world class bullion manufacturing and refining facility in Singapore tomorrow, 26 June 2014. These initiatives are key building blocks in the country s drive to become a regional precious metals trading hub.

5. Albert Cheng, Far East Managing Director at the World Gold Council said, The global gold market continues to shift from west to east and Singapore s ambitions to become a gold hub reflect this trend. Since its inception, the World Gold Council has worked with key market participants to drive the development of this market. We believe this innovation will contribute substantially to the creation of a more efficient market capable of satisfying growing local demand for gold in a transparent and trusted manner - it will provide the foundation for further development of the gold market throughout South East Asia.

6. Gina Lim, Trade Services and Policy Group Director, IE Singapore, said, It has been a most rewarding journey with the gold industry, from when IE Singapore first engaged with them in 2011. Starting with the exemption of GST on investment precious metals and attracting Metalor to set up its refinery in Singapore, this unique wholesale kilobar gold contract is another milestone achieved in collaboration with the industry. IE Singapore had the privilege of working with key players like the World Gold Council, SBMA, the major bullion banks and SGX to enable this outcome. This Contract will provide the industry with a more efficient and transparent market, and enhance Singapore s infrastructure for precious metals trading.

7. Ng Cheng Thye, President, SBMA, added, This Contract will help to develop the gold market in South East Asia by creating greater liquidity and opportunities for growth. With a stock and flow of bars guaranteed by the major bullion banks, as well as an exchange open to the key buy-side participants, we believe this will encourage further products to be developed in South East Asia, which are based on this kilobar contract model.

8. Muthukrishnan Ramaswami, President, SGX shared, SGX is pleased to support the consortium's efforts to develop Singapore as a global trading hub for gold. SGX's market place will enable the trading and clearing of the Singapore Kilobar Gold Contract and establish a fully transparent price discovery mechanism for gold in this region. The new contract illustrates SGX s ongoing commitment in fostering greater market transparency in a well-governed and regulated framework within the Asian time-zone.

9. Since the exemption of GST on IPM in October 2012, trade in gold has risen by 94% year-on-year between 2012 and 2013 from S$18 billion to S$35 billion.

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ANNEX

CONTRACT FACTSHEET

Singapore Kilobar Gold Contract
The first exchange-traded physically-delivered 25 kilobar gold contract

Introduction
In 2012, the Singapore government announced its ambition for the city to become a precious metals trading hub in the region. The government removed GST from IPM in October 2012. Metalor Technologies subsequently announced its entry to Singapore in November 2012, and started operations in June 2013. It will officially open on 26 June 2014.

Singapore Kilobar Gold Contract
The establishment of a physical kilobar trading marketplace and an efficient trading platform are essential for Singapore to develop a more mature and efficient eco-system for the regional gold market.

The Singapore Kilobar Gold Contract will be traded on a centralised and transparent market where transactions are executed on a regulated platform by SGX. Supported by leading upstream and downstream industry players, the Contract will bring the kilobar to exactly where the market is Asia.

The first of its kind globally, the Singapore Kilobar Gold Contract is unique because:
Of its size, it is the first 25 kilobar contract to be offered to the market.
It is physical settlement only, largely for the gold industry.
It provides a series of six daily contracts, which will give physical gold users access to competitively-priced kilobars.
It is traded three hours in the morning at Asia time, prior to the opening of the London market.
It will be traded and cleared on SGX, who acts as a central counterparty.

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Attachments

20140625_Joint_Annct_Spore_kilobar_gold_1st_in_world_to_trade_on_exchange_platform.pdf
Total size =221K