Singapore to establish OTC gold clearing, central bank gold-vaulting services

Singapore is set to significantly bolster its standing as a global gold trading hub with the establishment of an over-the-counter gold clearing system and the introduction of central bank gold-vaulting services. Deputy Prime Minister Gan Kim Yong announced the initiatives, which aim to enhance the city-state's financial infrastructure and attract international players in the precious metals market.

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This strengthens Singapore’s proposition as a jurisdiction where reserve assets can be securely held, actively managed, and connected to wider market liquidity during Asian trading hours.

By the end of this year, the Singapore Exchange will launch an OTC gold clearing system for "Loco Singapore" – physical gold stored within the country. Six prominent banks, including DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB, have been designated as clearing members. Concurrently, the Monetary Authority of Singapore (MAS) will introduce central bank gold-vaulting services by October. These services will offer foreign central banks and sovereign entities a secure platform for storing their gold reserves.

"This strengthens Singapore’s proposition as a jurisdiction where reserve assets can be securely held, actively managed, and connected to wider market liquidity during Asian trading hours," Gan stated. The SGX is also exploring a physically deliverable gold futures contract to improve price discovery and risk management for Loco Singapore. Furthermore, MAS will remove a 5% cap on physical investment precious metals within tax-incentive schemes for eligible funds and family offices.

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Asia’s demand for financial services is growing ... At the same time, global fragmentation and uncertainty are raising the premium on safe, trusted and credible venues for intermediation.

Singapore is committed to aligning its market practices with international standards, such as the LBMA Good Delivery framework and settlement standards from major exchanges like the Chicago Mercantile Exchange and Shanghai Gold Exchange. These efforts, emerging from a dedicated working group, come as local banks expand their gold trading services and other financial centers vie for a larger share of the gold market. The initiatives are designed to broaden Singapore's marketplace, enabling institutions and companies to manage long-term investments, preserve value, and transact with confidence amidst growing Asian demand and global uncertainty.

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Our initiatives will broaden Singapore’s marketplace, so that institutions and companies can manage investments for the long term, preserve value, and transact with confidence.