Hong Kong has signed an agreement with the Shanghai Gold Exchange in a bid to strengthen collaboration between the two gold markets.

Speaking at the Asian Financial Forum on Monday, Secretary for Financial Services and the Treasury Christopher Hui said one element of the agreement is to establish a high-level collaborative governance structure for Hong Kong’s new gold central clearing system.

Hui said he will be chairman of the board of Hong Kong Precious Metals Central Clearing Company Limited, which is wholly owned by the SAR government and on track to begin trial operations this year, while a representative from the Shanghai Gold Exchange will serve as deputy chair.

“In that capacity, the representative of the Shanghai Gold Exchange will actively participate in the board, contributing to the preparation of the gold central clearing system, the formulation of rules, the admission of participating institutions and the provision of expert advice on system design, risk management and also other areas,” he said.

Hui added that the Shanghai Gold Exchange’s physical warehousing management system will provide gold management services for Hong Kong and international market participants.

Gold has long been regarded as a cornerstone of the global financial system and the cooperation between the SAR and Shanghai carries profound significance, he said.

“It reflects our joint determination to deepen the integration and also complementary strengths of Hong Kong and Shanghai, so that together, we can expand our share and influence in the global gold market and also better support RMB internationalisation,” he said.

“Guided by the principles of mutual learning, win-win cooperation, interconnectivity, mutual recognition and shared development, we will leverage the distinct advantages of both markets to enhance transaction and also delivery efficiency, and also at the same time, elevate our voice in international gold pricing and also governance.”

Hui also said the government aims to develop a global vault with gold storage facilities, with a target to exceed 2,000 tonnes of storage capacity within three years.