Renminbi Kilobar Gold Contract is a legally binding gold contract with its price fixing on board for physical settlement at a prescribed time in the morning session on every business day.
Each Renminbi Kilobar Gold Contract contains one lot of spot gold. The value of Renminbi Kilobar Gold Contract is equal to contracted price multiplied by the number of contracts.
Renminbi Kilobar Gold Contract is traded under the Electronic Trading System, which is established and operated by the Chinese Gold & Silver Exchange Society (“CGSE”). System software vendors of the Trading System is subject to change at appropriate times.
At the close of each trading day, the settlement system of CGSE calculates the book value of Renminbi Kilobar Gold profit or loss (mark-to-market), and credits the profit and debits the loss to the respective accounts of contract buyers/sellers or withdraw from these accounts the amounts which are the differences between contract prices and daily settlement prices multiplied by number of contracts.
A system of liquidity providers is established to ensure the maintenance of basic liquidity in trading of Renminbi Kilobar Gold. Under the CGSE’s trading procedures, liquidity providers are responsible for offering continuous quotes of bid prices/ask prices for a minimum number of contracts.
Contract Summary of Renminbi Kilobar Gold
1. Type of transaction
Contract is quoted and settled in Renminbi and physical delivery of gold is adopted.。
Accredited No.1 (fineness 9999) or No.2 (fineness 9995) gold bar of Shanghai Gold Exchange and/ or Kilobars manufactured by CGSE-accredited refineries (fineness 9999).
Trading is only available for CGSE Members who are approved to trade through electronic trading platform.
4. Trading Platform
Adopting current electronic trading platform to provide Renminbi Kilobar Gold product trading.
5. Price fluctuation
RMB¥0.01 per gram.
6. Liquidity providers
Price quotation offered by the approved liquidity providers.
7. Physical delivery
In regard to CGSE Members' physical delivery of gold, sellers are obliged to dispatch the Kilobars to buyers in designated locations or locations designated by CGSE (upon agreement reached by both contracting parties) to effect delivery. (NB: The responsibility to take out insurance related to physical delivery of gold rests with CGSE Members.)
8. Delivery standards
a. Accredited No.1 or No. 2 gold bar of Shanghai Gold Exchange (fineness and weight), and/or;
b. 1 kg Kilobar or 3 kg Kilobar manufactured by CGSE-accredited refineries.
9. Contract size
1 kilogram contract.
10. Settlement bank
Wing Hang Bank and Bank of China (Hong Kong) Limited are commissioned to act as settlement bank for trading of Renminbi Kilobar Gold. The responsibility for conversion of RMB rests with CGSE
Members only and CGSE is not involved in the currency exchange.
Based on funding cost of RMB, premium of Renminbi Kilobar Gold shall be negotiated among four CGSE's designed bank members and three independent gold dealers. The consent of four top
executives of CGSE shall be required for giving effect to the agreed interest rates before they are
published on the CGSE's website and the electronic trading platform.
12. Trading hours 7:00 a.m. – 5:00 a.m. (the day after).
13. Settlement price and clearing price
Settlement price is determined at 11:55 a.m. on trading day (price determination in physical delivery and clearing at 3:00 p.m.). Clearing price is determined at 5:00 a.m. on the next day morning.