The ASX and The Perth Mint (Gold Corporation) have signed an agreement to develop new precious metals derivatives products that will be quoted and traded on ASX.
The collaboration will enable ASX to grow its suite of commodities products and services, backed by the world-class physical market infrastructure of The Perth Mint.
ASX proposes to distribute the new derivatives products to customers around the world using its 24-hour, globally connected network. The Perth Mint will provide physical precious metals and its world-class secure storage facilities in support of this. The first product is expected to be launched in the second half of 2016.
Australia is a major global producer of precious metals (second largest producer of gold and fourth largest producer of silver). Perth is the primary physical aggregation point in Australia and recognised as a key benchmark pricing location in the Asia region, which is home to two major precious metals consuming countries – China and India.
The derivatives products will provide precious metals market participants with a transparent and relevant forward price curve, enabling them to more effectively hedge their exposures. The new products will complement the highly liquid physical market for precious metals that already exists in Perth.
Mr Peter Hiom, ASX’s Deputy CEO said: “ASX is working hard to meet the growing demands of our customers in Australia and across the Asian region for investment and risk management products. We already operate some of the most liquid and mature financial markets in the region. The A$ interest rate futures market is the largest in Asia, with a notional annual value of over $40 trillion.
“The collaboration between ASX and The Perth Mint is the perfect fit for our companies and our customers. It brings together ASX’s derivatives expertise with the scale and sophistication of The Perth Mint’s precious metals operations. The result will be financial instruments closely aligned to the underlying market, which are tailored to the needs of participants and investors, and other market participants in the Asian region.”
Perth Mint CEO, Mr Richard Hayes said: “In fulfilling one of our key functions to maximise export income from Australia’s gold production, The Perth Mint has established an international reputation for excellence in precious metals and developed deep and longstanding relationships with physical traders and importers across Asia.
“We look forward to working with ASX to develop exchange-traded products that will further broaden distribution channels for Australian gold and support Perth’s role as an international bullion centre. The combination of ASX’s clearing and settlement infrastructure, backed by its significant capital and collateral, and The Perth Mint’s global expertise in precious metals refining, manufacturing, distribution and storage, supported by a Western Australian government guarantee, will provide certainty for traders and investors and reduce counterparty and systemic risk.”