Infrastructure of the Shanghai Gold Exchange


The Shanghai Gold Exchange was established in October 2002 by the People’s Bank of China[1][2]. The goal of the Exchange at launch was to become the central hub of the Chinese gold market, a goal which has fully been met.

Physical gold flows through the Shanghai Gold Exchange in response to Chinese private sector demand (institutional, commercial and retail demand). To facilitate this demand, trading account facilities on the SGE are available to anyone in China, i.e. private citizens can open an SGE trading account and trade gold at the SGE as easily as a wholesale enterprise or a financial institution can.

The SGE classifies its gold trading activities into a ‘Price Matching’ market, which trades physical and deferred gold contracts, and a ‘Price Inquiry’ (OTC traded) market which offers bilateral spot, forward, swaps and options trading in an OTC ‘Price Inquiry’ environment. The SGE Shanghai Gold Price Benchmark auction, launched in April 2016, is additional to both the above SGE ‘Markets’. The SGE also facilitates gold leasing and pledging activities which are also distinct from its price matching and price inquiry markets.

Although the SGE has a headquarters ‘Exchange’ building located in the central Huangpu District of Shanghai, all SGE’s trading platforms are electronic. The SGE also employs a central market clearing process to clear all of these products. An extensive network of 61 SGE gold vaults across 35 Chinese cities facilitates the vaulting, delivery, and transfer of gold that flows into and out of the vaults  due to SGE trading.


  • The Shanghai Gold Exchange (SGE) operates a comprehensive suite of gold trading services both ‘on Exchange’ (Price Matching market) and ‘off Exchange’ (Price Inquiry /OTC market).

  • Contracts on 12 gold products are offered ‘on exchange’ while ‘off exchange’ trading offers contracts in 5 gold products. Transactions from both venues are settled and centrally cleared by the SGE.

  • In April 2016, the SGE launched its twice daily SGE Gold Benchmark Price auction. This auction generates a usable gold reference price.

  • In January 2016, the SGE facilitated the launch of an interbank gold leasing market with official market makers aimed at enhancing Chinese gold market liquidity.

Memberships and Boards

Membership of the SGE is divided into domestic and international categories. As of the end of 2016, the SGE had 253 domestic members which represented approximately 10,800 corporate customers and approximately 8.9 million individual customers. There are various member types within the domestic membership category. ‘Financial Members’ are authorised by the Exchange to engage in brokerage transactions and proprietary trading. ‘General Members’ are permitted to only engage in proprietary trading. The remaining domestic membership categories are ‘Special Members’ and ‘Proprietary members’. There is also an international membership category which includes international banks and international institutions. As of the end of 2016, there were 67 international members.

The SGE members with the highest trading turnover are Shenzhen Finance Electronic Settlement Centre, ICBC, Bank of China, Bank of Communications, and China Construction Bank.

In 2014, the SGE, in conjunction with the Chinese authorities, launched the Shanghai International Gold Exchange to advance the internationalisation of China’s gold and currency markets. The Shanghai International Gold Exchange, also known in English as the ‘SGEI’, and the ‘International Board’, is a fully owned subsidiary of the SGE and is both registered in and physically located in the Shanghai Pilot Free Trade Zone (FTZ). See BullionStar Gold University article “Mechanics of the Shanghai International Gold Exchange” for full details[3]. Given that the SGEI is known as the ‘International Board’, the existing Shanghai Gold Exchange is often referred to as the ‘Main Board’.

The SGEI offers ‘international’ members access to Renminbi trading of gold on both the Main and International Boards. If trading on the International Board, the associated physical gold is vaulted in the International Board’s certified precious metals vault, located in the Shanghai Free Trade Zone. If trading on the Main Board, the associated physical gold can be in any of the domestic SGE vaults, however, International Members are not allowed to load in or load out metal from domestic vaults[4].

In addition, the SGEI allows domestic members to trade gold located in the SFTZ but they are, in turn, not allowed to load in or load out metal from the SGEI vault. 

Trading – ‘Price Matching’ Market

The SGE offers 16 trading contracts in its Price Matching market, 12 of which are in gold, 3 are in silver and 1 of which is in platinum. Of the 12 gold contracts, 8 are physical products and 4 are deferred settlement products. Exchange members and their customers buy and sell these contracts via the SGE’s electronic system, which then matches buyers and sellers by matching on executed price.

Of the 8 physical products, 5 of these products trade on the Main Board of the Exchange (domestic), and a further 3 trade on the Exchange’s International Board. These 8 products are:

Main Board:

  • Au50g          physical product       50 gram gold bar       fineness 999.9
  • Au100g        physical product       100 gram gold bar     fineness 999.9
  • Au99.99       physical product       1 kg gold ingot           fineness 999.9
  • Au99.95       physical product       3 kg gold ingot           fineness 999.5
  • Au99.5         physical product       12.5 kg gold ingot      fineness 995.0

International Board:

  • iAu100g       physical product       100 gram gold bar    fineness 999.9
  • iAu99.99      physical product       1 kg gold ingot          fineness 999.9
  • iAu99.5        physical product       12.5 kg gold ingot     fineness 995.0

For physical trading, sell and buy participants are required to hold the full amount of physical gold or cash funds respectively, before trading. Upon trade settlement, the SGE will credit the physical gold to the buyer’s account and credit the cash proceeds to the seller’s account.

All 4 of the deferred settlement products offered by the SGE trade on the Exchange’s Main Board. Deferred settlement contracts trade on margin, and the contracts can be settled on trade day or at a later date. Two of the four deferred contracts are non-fixed maturity date contracts, the other two are fixed maturity date contracts:

T + D contract: Non-Fixed Maturity Dates (i.e. no pre-determined settlement date)

  • Au(T+D) (1 kg per lot, delivery in 3 kg or 1 kg ingots)
  • mAu(T+D) (100 gram per lot, delivery in 1 kg ingots)

T + N contracts: Fixed Maturity Dates

  • Au(T+N1) (100 gram per lot, delivery in 1 kg ingots)
  • Au(T+N2) (100 gram per lot, delivery in 1 kg ingots)

Maturity date of Au(T+N1) contract = 15 June
Maturity date of Au(T+N2) contract = 15 December

In 2016, the ‘Price Matching’ market recorded gold trading volumes of 15,200 tonnes.

Trading – ‘Price Inquiry’ Market

The SGE’s ‘Price Inquiry’ market is a bilaterally negotiated Over-the-Counter (OTC) market. Bilateral Over-the-Counter (OTC) trading refers to trading between participants ‘off’ exchange, with trade settlement on the SGE. OTC trading volumes therefore still feed into the SGE systems and are reported within the SGE’s published overall trading volumes.

Two of the Main Board physical products (Au99.99 and Au99.95) and all 3 of the International Board products trade on the Price Inquiry market. The SGE uses the prefixes ‘P’ and sometimes ‘OTC’ to denote these OTC products. These 5 products are:

  • OTC Au99.99 / PAu99.99
  • OTC Au99.95 / PAu99.95
  • OTCiAu99 / PiAu99.99
  • OTCAu50g / PiAu50g
  • OTCAu99.5 / PiAu99.5

The SGE’s gold OTC contracts can be structured as spot, forward or swap. During 2016, 59% of OTC transactions generated were in Swaps, 29% in Spot and 12% in Forwards. There is also a separate set of SGE gold price options products under the Price Inquiry umbrella.

The Chinese ‘inter-bank’ gold market, launched in January 2016, is a core part of this SGE OTC market. This ‘inter-bank’ market facilitates bi-lateral gold trading between Chinese financial institutions, and supports an official market making mechanism consisting of 16 market makers, 10 of which are large banks such as ICBC, Bank of China and China Construction Bank, and the other 5 of which are smaller Chinese banks. One of the main roles of the market makers is to enhance gold trading liquidity on the market[5].

More than 50% of trading volume in the SGE Price Inquiry segment is traded through the China Foreign Exchange Trade System. In 2016, there were 55 institutional participants in the OTC gold market, 41 of which were small and medium-sized banks. Other participants include securities firms, fund management companies and trust companies. This market also uses 2 introducing brokers which are Tullett Prebon SITICO (China) Ltd, and Shanghai CFETS – ICAP International Money Brokering Co Ltd[6] Reuters also publishes real-time quotes for these SGE OTC gold products.

In 2016, the ‘Price Inquiry’ market recorded gold trading volumes of more than 8,800 tonnes.

Trading – Shanghai Gold Benchmark Price auction

The SGE’s Shanghai Gold Benchmark Price auction is a twice daily auction for physical 1 kilogram gold bars. Its objective is to establish a benchmark gold price at which supply and demand in the auction is balanced. The SGE’s Gold Benchmark Price auction was launched on 19 April 2016[7][8].

The contract specifications of the auction[9] are as follows:

Shanghai Gold Benchmark Price auction

Abbreviation: SGE Gold Fix

Exchange Code: SHAU

Frequency: Twice per trading day at 10:15 am and 2:15 pm (Shanghai / Beijing Time)

Platform: SGE’s electronic trading platform

Auction Model: Centralised Pricing Trading

Objective: Derivation of a ‘Benchmark Price’ at which supply and demand are in balance

Unit of Trading: Physically-delivered 1 kg lots of 99.99% purity gold or higher

Imbalance Tolerance: within 400 kgs

Quotation: Renminbi (RMB) per gram

Tick Size: RMB 0.01

Delivery: 1 kg Standard gold ingots of fineness 999.9 or higher

Delivery Location: SGE’s certified vaults, i.e. 61 vaults across 35 Chinese cities

Settlement / Delivery: T + 2

Clearing: Central Clearing (with SGE acting as counterparty to all buyers and sellers)

Note: Standard gold is either gold from an SGE approved refinery or gold from a LBMA approved refinery.

The auction utilizes an opening price known as a ‘Reference Price’ that is calculated from prices entered into the trading system by both ‘Fixing Members’ and ‘Reference Price Members’ during a 5 minute pre-auction window period between 10:09 am – 10:14 am before the morning auction and between 2:09 pm – 2:14 pm before the afternoon auction.

There are 12 Fixing members in the auction, all of which are banks. These banks include ICBC, Bank of China, China Construction Bank, ANZ, and Standard Chartered. There are 6 Reference Price members in the auction such as gold mining companies (China Gold and Shangdong Gold Group), gold jewellery companies (Shanghai Lao Feng Xiang and Chow Tai Fook), and gold trading company MKS PAMP.

Briefly, the auction mechanism is as follows[10]. Fixing members and Reference Price members initially submit reference prices. After establishing the opening price / calculated reference price, SGE member and customer then submit buy and sell orders. There is then at least one round (the first round) and possibly subsequent rounds. As soon as the imbalance between auction supply and demand is less than 400 kgs, the imbalance is shared out among the Fixing members. The price is then balanced and is published by the SGE as the benchmark price.

Each round includes a ‘market tendering‘ segment and a ‘supplementary tendering‘ session. During the market tendering segment, all auction participants and their clients submit orders. During the supplementary tendering session, Fixing members can submit supplementary orders against the remaining imbalanced quantity. This is done so as to try to speed up the auction and end with an imbalance of less than 400 kgs of gold bars.

An SGE Surveillance Committee oversees the auction’s functioning. This Committee comprises representatives from the SGE, ICBC, Bank of China, Standard Chartered Bank (China), ANZ Bank (China), China Gold Coin Corporation, Baird Mint, the China Gold Association, and the World Gold Council and has a remit of monitoring trading, clearing, delivery, in terms of the SGE Benchmark’s trading and compliance rules.

Daily, monthly and annual prices for the ‘Shanghai Gold Benchmark Price’ and associated charts of this data are viewable on the SGE Benchmark web page on the SGE website[11].

Since it was launched in April 2016, nearly 600 tonnes of gold have been traded through the SGE Gold benchmark auction, with 284.5 tonnes traded during 2016, and a further 302.6 tonnes traded during the first seven months of 2017[12][13].

Gold Leasing on the SGE

The SGE also offers gold leasing to its members and customers. This is distinct from the above contract trading discussed in the Price Matching and Price Inquiry markets. The SGE refers to these transactions as ‘Non-trading physical transfers’. In 2016, the SGE platform facilitated gold leasing on behalf of 31 commercials, representing 1700 tonnes of gold. These transactions are tracked via a ‘Master Agreement for Gold Leasing Transactions’. The SGE also offers other related services such as gold pledging and location swaps. International members can borrow gold from each other and also from domestic members of the SGE that have a gold import license.

SGE Trading Accounts

Accounts at the SGE comprise two components, a bullion account (for holding bullion) and a margin account (for holding cash – trading margin and clearing deposit). Anyone in China can open an SGE account to transact gold from. These accounts can be opened at participating Chinese banks.

Alternatively, Chinese individuals can also open an SGE account via a smart phone application called Yijintong[14]. Users of Yijintong first open an SGE account online and then execute SGE gold transactions online. In SGE documents in English, Yijintong is sometimes known as the ‘SGE Gold App’.

References and Links

1.^ “Chinese Gold Market”, People’s Bank of China

2.^ SGE Overview, Shanghai Gold Exchange website

3.^ “Mechanics of the Shanghai International Gold Exchange”

4.^ Chart of Vaulting scenarios for Main and International Boards cros-referenced with Domestic and International Members, Koos Jansen, BullionStar

5.^  “China launches interbank gold trading system”,, January 2016

6.^ SGE Annual Report, 2016

7.^ “Shanghai Gold Benchmark Price – New Kid on the Block”, BullionStar, April 2016

8.^ “SGE Gold Fix White Paper, SGE website

9.^ “Contract Specifications for Shanghai Gold Benchmark Price Trading”, Word Document, SGE website,

10.^ “Trading Rules of the Shanghai Gold Benchmark Price auction”, May 2016, SGE website

11.^ SGE Gold Benchmark Price data page, SGE website

12.^ SGE Trading Data Highlights report, December 2016

13.^  SGE Trading Data Highlights report, December 2017

14.^ “In China Everyone Can Buy Gold At The SGE”, BullionStar, January 2016