Big chinese banks ending retail leveraged Gold and Silver futures trading

At least a dozen large Chinese banks plan to end leveraged precious metals futures contracts.

Specifically, banks are shutting down Shanghai Gold Exchange margin-traded deferred contracts, including Au(T+D) and Ag(T+D).

The move could potentially increase demand for physical metal in China, the world's largest gold market.

Beijing-based China Everbright Bank is the latest Chinese institution to announce an end to leveraged precious metals trading, targeting an exit sometime after Oct. 19.

Earlier this month, Shanghai Pudong Development Bank made a similar announcement.

These banks join at least 10 other major Chinese lenders that have already exited or announced plans to leave the leveraged futures business, including ICBC, the country’s largest bank, along with Bank of China (BOC) and China Construction Bank. 

Shanghai-based Orient Futures analyst Xu Ying called it “an inevitable shift” and predicted every major bank will eventually exit the business. 

Sources at two banks told the South China Morning Post that the Shanghai Gold Exchange (SGE) directed the move. The SGE is China’s primary platform for physical precious metal trading physical gold and silver.  

Officials also appear to be phasing out unleveraged spot gold futures contracts for retail customers.

In practice, leveraged trades allow investors to borrow money to speculate on gold and silver futures. Chinese banks have allowed leveraged precious metals trading for more than two decades. The SGE general sets margin requirements, allowing retail customers to post as little as one-sixth of the contract value.

Of course, borrowing money to speculate on the price movement of gold and silver comes with a high level of risk. Xu told the South China Morning Post this makes leveraged trades “a poor fit for domestic retail clients,” adding that most have “limited trading know-how and tend to be risk averse.”

As precious metals volatility has increased, banks have progressively raised margin requirements. By the end of the first quarter, state-owned banks had raised them to 100 percent, effectively eliminating leverage.

The oil price collapse in April 2020 focused attention on leveraged trading. Many retail investors saw their entire portfolios wiped out by the “fiasco.” An unnamed source with Bank of China told the South China Morning Post that after the incident, regulators began “mulling a broader phase-out of retail commodity-linked trading products offered by domestic banks.”

“The fiasco itself was so disruptive that it prompted sweeping regulatory caution towards retail leverage instruments.”

The same source said mainland lenders will now be expected to offer “only physical gold and non-leveraged gold-accumulation plans – products that let investors buy small, regular amounts of gold over time without borrowed funds – for retail investment purposes.”

The move could shift some speculative paper trading into physical gold and silver.

Based on SGE data, three major deferred gold and silver contracts generated roughly 12.6 trillion yuan ($1.9 trillion) in two-sided trading value in 2025. That covers the entire market for those contracts, not just retail trading. These figures also measure repeated trading, not just the amount of cash investors committed.

Public figures do not show how much money those customers might now have to redirect elsewhere. However, if these investors want to maintain exposure to gold and silver, they will need to pivot to physical metal, long-term accumulation plans, ETFs, or digital gold products.

Chinese banks seem to be directing customers to physical metal and bank-run accumulation plans, while ETFs are available through securities investment accounts.