Hong Kong will build an international gold trading market in line with its broader aim to establish an ecosystem for commodities trading as the bullion price consistently hit record highs this year amid strong demand.

The government also unveiled a series of measures to further enhance the securities market.

The Financial Services and the Treasury Bureau will set up a working group to bring the gold trading center initiative forward, which includes discussions with mainland authorities to add gold-related products in cross-border connecting schemes.

To support the trading center, the government will promote gold storage facilities and help an international commodity exchange set up accredited warehouses in Hong Kong.

This follows reports that the London Metal Exchange, a unit of Hong Kong Exchanges and Clearing, is expected to approve the expansion of its global metals warehousing network into Hong Kong by year-end.

Sources said authorities aim to at least double the amount of its gold reserves, although the location of the warehouse is still to be decided. Currently, the city’s gold storage capacity at the airport, which stands at 150 tonnes, is nearing full capacity, they added.

Spot gold yesterday was near the record US$2,685.58 (HK$20,947) set last month, with a year-to-date gain of about 30 percent fueled by expectations of interest rate cuts and ongoing geopolitical tensions. The bullion is expected to climb to fresh record highs next year.

In addition to gold, the government is exploring such incentives as tax concessions to attract commodities-related enterprises to establish operations in Hong Kong.

To further enhance the city’s securities market, one of the focuses will be streamlining the process for listing applications.

Sources said that regulators will ask companies applying for listings in the city to answer two rounds of questions within 40 business days before forwarding applications to the local bourse’s listing committee.

This marks a change from the previous process, which had no specific timeframe.

Authorities will also review margin deposit arrangements and refine requirements for collateral placement to improve market efficiency.

In support of yuan internationalization, Hong Kong will introduce more yuan-denominated investment products, increase the issuance of yuan-denominated bonds, and work with mainland authorities to expand Southbound trading under Bond Connect, including expanding the scope of eligible mainland investors to non-bank financial institutions such as securities firms and insurance companies.

Sources: The Standard