Upon the approval from China Securities Regulatory Commission, SHFE will start the trading of gold futures contracts on Jan. 9, 2008.

The contract size of SHFE gold futures is 1 kilogram per lot and the individual investor is not allowed to take physical delivery, as the rules prescribe.

According to the SHFE spokesperson, the contract size has been widely agreed upon during the public consultation period. Such a contract as it is, the risk-averse investors are discouraged from entering into the futures trading of the metal, the institutions, however, will find it a desirable size to trade with. It also helps the market to be more integrated into the global one.

As the spokesperson put it, the major functions of a futures market is price discovery and hedging, and the physical exchange is not the main objective. On the other hand, the physical delivery of a futures contract needs different types of investors to fulfill a varied set of requirements. Therefore, the individual investors are not permitted to bring their positions into the spot month. An individual can purchase the physical metal via a bank or the cash market.

On Sep. 11, 2007, SHFE was approved of launching gold futures contracts.