Singapore Establishes OTC Gold Clearing System, Central Bank Gold Custody Service to Launch in October
Miles Bennett
Singapore will launch OTC gold clearing by year-end, open central-bank-grade bullion custody in October, and lift institutional gold-holding caps — a three-pronged bid for Asia's gold-pricing hub status.
What are the three moves Singapore just announced?
Deputy Prime Minister Heng Swee Keat unveiled three initiatives on June 16, all stemming from a task force set up earlier this year.
First: SGX will build a "Loco Singapore" OTC gold clearing system by year-end — gold trades can settle locally instead of routing through London.
Second: MAS will launch a central-bank bullion custody service in October, giving foreign central banks and sovereign funds a vault option in Singapore.
Third: the 5% cap on physical precious-metals holdings under qualifying fund and family-office tax-incentive schemes is removed, opening up institutional gold allocation.
How will "Loco Singapore" clearing actually work?
Six banks form the initial clearing membership: DBS, Deutsche Bank, ICBC Standard Bank, J.P. Morgan, OCBC, and UOB.
This means → these six act as core clearing nodes; OTC gold trades settle on-shore in Singapore, no longer dependent on London's clearing channel.
SGX is also exploring a physically deliverable gold futures contract to add price discovery and risk management on top of the clearing layer.
Central-bank custody — why does it matter on its own?
Central banks worldwide have been steadily adding gold, but the main storage locations remain London, New York, and Switzerland.
In plain terms = MAS is turning Singapore into another "sovereign-grade vault" — foreign central banks can hold bullion here and access it during Asian hours.
This reflects a rising demand among central banks for geographic diversification of reserve assets. Singapore is entering a lane that only a handful of cities have occupied.
Are local banks already moving ahead?
DBS announced last week it will offer tokenized physical gold to retail clients — in plain terms = ordinary depositors can buy a digital token backed by real gold bars, straight from a mobile app.
OCBC said it will let institutional and private-banking clients buy, sell, and store physical gold in Singapore.
This means → the clearing infrastructure is not yet live, but local banks are already building products on top of it — retail through institutional, full spectrum.
Hong Kong is moving too — what does the competition look like?
According to an earlier Reuters report, HKEX is also studying a relaunch of gold futures. A competitive landscape between the two financial centres is taking shape.
Singapore's playbook is "all three at once": clearing infrastructure + sovereign-grade custody + regulatory easing, aiming to assemble a complete ecosystem in one go.
This reflects a long-standing gap: Asia's trading hours have lacked an autonomous gold-pricing and clearing centre. Singapore and Hong Kong are both vying to fill it. The ultimate test: whether Asian hours can generate enough liquidity depth.
Content is for reference only, not financial advice.