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

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

According to SHFE spokesman, the contract size of gold futures is widely agreed among the public. Such a contract size as it is, the risk-averse investors are discouraged from entering into the trading, but the institutions will find it convenient to trade. It will help the market to be integrated into the global pricing structure.

The major functions of a futures market are price discovery and hedging, as the spokesman put it, physical delivery is not the main purpose for futures trading. On the other hand, in physical delivery, different types of investors will face a varied set of requirements. If the individual investors need to purchase physical metal, they could choose to do it via a bank or the cash market.

On Sep. 11, 2007, SHFE was given permission to list gold futures contracts.