Chinese banks allowed to trade gold futures 2008-03-24 23:51:57
BEIJING, March 24 (Xinhua) -- Chinese commercial banks will
be allowed to trade gold futures in the domestic market, according
to a notice released on the regulator's official website here
China gold futures trading was launched in January, but
domestic banks were barred from trading by the China Banking
According to the notice, domestic banks that meet certain
requirements, such as having capital adequacy ratio of more
than 8percent, can apply for a trading permit.
"That's great news for the gold futures market, which
is not operating that well," said Hu Yuyue, an expert
with Beijing Technology and Business University.
"Commercial banks can provide more liquidity and stability
to the market, after all, they hold huge capital," said
"Gold futures trading can also help domestic banks
to improve competitiveness against overseas banks as financial
derivatives are supposed to be the largest revenue sources
for leading banks," he said.
Non-interest income usually accounts for at least 50 percent
of bank revenues in developed countries and the proportion
can reach 80 percent for some banks.
However, Chinese banks depend heavily on the margins between
deposits and loans.