I. Precious Metal Lending
Bank of Communications lends/borrows physical precious metals to/from financial institutions (including banks, non-bank institutions, precious metal dealers, etc.) with reference to the market price. Upon expiration, physical precious metals of the same quantity and grade are recovered or returned, and interests are collected or paid under cash settlement.
1. The financial institution signs an inter-banking framework agreement with Bank of Communications;
2. The counterparties agree on specific elements of the transaction;
3. The counterparties submit the confirmed transaction elements to Shanghai Gold Exchange and allocate the precious metals after successful matching;
4. On the expiration date of the transaction, the counterparties settle the precious metals in physical and the interests in cash.
II. Precious Metal Inquiry
Bank of Communications and the counterparty reach an inquiry agreement on the trading elements such as item/quantity/price, and deliver at the agreed trading date.
1. Overseas market inquiry: the inquiry transactions, via Reuters Dealing, etc., conducted between Bank of Communications and the counterparty with credit lines. And bilateral clearing is completed through counterparties’ own bank accounts.
2. Domestic market inquiry: the inquiry transactions, via SGE/CFETS, etc., conducted between Bank of Communications and the counterparty with credit lines. And clearing is completed in the exchange.
1. The counterparties achieve a framework agreement on the precious metal inquiry trade;
2. The counterparties check the inquiry trading exposure and the credit line to ensure that the risk management requirements are satisfied;
3. The counterparties agree on the trading elements and conclude the inquiry transaction via the inquiry trading system;
4. The counterparties deliver cash or physical precious metals in accordance with the agreement on the expiration date of the transaction.