In the latest news following the closure of gold exchanges in Hunan, Liaoning, Xi’an, and Chongqing, the newest development is that gold exchanges in Sichuan province have been completely abolished. Over the years, the number of gold exchanges across mainland China has been rapidly increasing, but due to regulatory failures, incidents of risk associated with products registered in these exchanges have been continually emerging.
Recently, the Sichuan Provincial Local Financial Regulatory Authority issued a notice stating that Sichuan Financial Assets Trading Co., Ltd. voluntarily applied to exit the exchange industry and would no longer engage in related business. As of the date of this announcement, there are no legally operating financial asset trading venues in Sichuan province.
The decision to “completely abolish gold exchanges in Sichuan province” has sparked discussions and debates among netizens. Many online users have expressed concerns about the past misconduct of the gold exchanges, questioning whether simply shutting them down is enough without holding those responsible accountable.
Some have called for a thorough investigation into the profit chains and institutions involved in these exchanges, emphasizing the need to prosecute those who have deceived and harmed people.
Others have pointed out that there was fierce competition among various gold exchanges, with extravagant and government-backed platforms luring investors with promises of high returns, only to lead to losses and scandals. Reports from Caixin Online indicate that illegal fundraising and financial activities have been rampant due to varying degrees of support from local governments, both overtly and discreetly.
Financial experts believe that the regional authorities only began to take notice when the financial networks collapsed and affected regional stability, by which time it was too late to prevent the consequences.
In May 2010, under the guidance of the Ministry of Finance of the Communist Party of China, two gold exchanges, Tianjin Gold Exchange and Beixin Gold Exchange, were established. Over the past 14 years, local governments have seen rapid growth in these exchanges to attract investment, with the peak number of exchanges reaching 80 in various regions.
In March of this year, financial regulatory departments in Hunan, Liaoning, Xi’an, and Chongqing successively announced the cancellation of business qualifications for gold exchanges and required that, apart from trading venues approved by central financial regulatory authorities, other local venues were not allowed to provide services for financial products.
Experts and regulatory insiders indicated at the time that the decisions made by the four provinces to cancel the qualifications of gold exchanges within their jurisdictions were not random occurrences but rather the beginning of a series of closures for gold exchanges.
Former employee Lin Kai, who had worked at the Shenzhen Gold Exchange for nearly 8 years, mentioned to local media that due to inadequate regulation, incidents of risk associated with products registered in gold exchanges had been frequent. Authorities have started to clean up and regulate local gold exchanges to gradually eliminate risks and reduce the number of exchanges. Hence, the demise of gold exchanges seems to have been inevitable.
Reports from the “Caijing Weekly” cited multiple insiders who claimed that, except for Beijing, all existing gold exchanges across various regions would be shut down within a year.
An article in the “Securities Times” once pointed out that due to weak regulation, so-called “gold exchange products” on the market concealed a significant amount of “illegal fundraising disguised as financial products.”
In recent years, gold exchanges have been a major channel for issuing non-standard financial products, and many products involved in financial scandals have had connections with these exchanges.
Non-standard financing refers to products traded between banks or exchanges that differ from standardized products.
According to the “Daily Economic News,” since December 2021, multiple regions including Guizhou and Jiangsu have announced the cleanup and regulation of financial asset trading venues in their jurisdictions. As per the information disclosed by regulatory authorities at the end of 2021, after the cleanup and regulation efforts, the number of gold exchanges decreased by more than one-third.