The Financial Conduct Authority (FCA) talked to banks about how it could regulate tokenized gold, the Financial Times reported today (Monday), citing people familiar with the plans. An announcement on standards is expected in the next few months.

The FCA does not oversee trading in physical gold, though it writes rules for gold derivatives and exchange-traded products, according to the FT report. The regulator declined to comment to the newspaper.

For brokers and their liquidity providers, the question is collateral. The FCA and the Prudential Regulation Authority are reviewing whether tokenized gold should count as margin on uncleared over-the-counter derivatives.

That would put the tokens next to cash and government bonds in daily margin calls, instead of leaving them as one more product sold to clients.

What the FCA Has Already Put on the Record

The review is public. The FCA and the Bank of England said in a joint call for input on May 18 that they were examining tokenized collateral eligibility.

The paper recognized the benefits of tokenized money market funds and tokenized gold as uncleared OTC collateral, “subject to developing standards with industry.” Responses closed on July 3.

The Bank said it would set out further policy later this year on how tokenized collateral can operate under existing rules. A discussion on assets that clearing houses already accept under UK EMIR is due in the third or fourth quarter.

“Tokenization has the potential to transform wholesale markets,” Simon Walls, the FCA’s executive director of markets, said when the paper was published.

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The two authorities plan to finalize a roadmap by the end of the year and consult on most rule changes in 2027. The FCA finalized separate rules for fund tokenization in April.

FinanceMagnates.com could not independently verify the FT’s account of the private talks. Neither authority has published a consultation dealing only with bullion, and the May paper sets no date for gold standards.

London’s 70% Share Meets a Hong Kong Clearing House

London handles about 70% of global gold trading volume, according to the World Gold Council. More than $160 billion a day changed hands in the loco London market in 2025.

Hong Kong began trial operation of a government-owned gold clearing house on July 7, and it settles through unallocated accounts, the same mechanism that clears more than 90% of wholesale loco London trading.

The Hong Kong Precious Metals Central Clearing Company follows a cooperation agreement with the Shanghai Gold Exchange signed in January. Four of the banks behind it, HSBC, JPMorgan, UBS and Citi, also sit in London Precious Metals Clearing.

Brokers Already Sell What the Regulator Is Studying

GCEX, a London-based digital prime brokerage, added Pax Gold and Tether Gold for institutional clients this year, months after listing gold futures CFDs.

HSBC’s retail gold token in Hong Kong, launched in March 2024, has handled more than $2.2 billion of trades across more than 276,000 transactions, the bank said, according to the FT.

In November, HSBC put the same token at $1 billion across about 100,000 transactions. Hong Kong’s Securities and Futures Commission cleared it for retail investors.

Retail demand for the metal shows up in broker numbers. Gold accounted for as much as 90% of total volumes at some CFD brokers this year.

Capital.com said gold drove 59% of monthly platform volume in a quarter when client turnover reached $1.27 trillion.

VT Markets reported $8 trillion in first-half volume, up 212% from a year earlier, with precious metals and currencies behind the increase.

Spot gold was quoted at about $4,356 an ounce over the weekend, roughly 22% below the record of $5,602 set on Jan. 28.

None of that retail flow touches the collateral question in front of the FCA. That one sits between banks.

“Shanghai wants to become the wholesale hub for the gold market,” one of the people told the FT.

This article was written by Damian Chmiel at www.financemagnates.com.Retail FXRead More

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