* Chinese banks increase over-the-counter gold trade at home
* No timeframe on giving out more gold import licences -PBOC
* Shanghai exchange also looking at OTC, Friday night trades
(Adds quotes on ETFs, Shanghai Gold Exchange plans, gold price)
By Rujun Shen and Polly Yam
HONG KONG, Nov 12 (Reuters) - China, set to surpass India as
the world's top gold consumer this year, is keen to further open
up its domestic market for the precious metal to the
international community, with Shanghai looking at gold
exchange-traded funds as the market matures.
Hoping to tap resilient Chinese demand for bullion as gold
prices head for their twelfth straight year of gains, the
Shanghai Gold Exchange (SGE) also said it would launch an
interbank market early next month.
"As the domestic market matures and opens up, the exchange
will launch over-the-counter trading, gold ETFs, Friday night
trading and improve the leasing market," SGE Chairman and
President Wang Zhe told a precious metals industry conference in
Hong Kong on Monday.
The gold ETFs will be traded on the Shanghai and Shenzhen
stock exchanges, said Zheng Zhiguang, general manager at
Industrial and Commercial Bank of China Ltd.
"There is no doubt that gold ETF products will be launched
in China. It's entered a study phase on regulation and
operation," Zheng said on the sidelines of the event.
"It will begin as a domestic market, but with future
development it can become a global market," he said, adding some
of the gold investment products that the bank offers would be
linked to ETFs in the future.
But immediate focus is on the launch of an interbank market
that will start with spot contracts and gradually offer forward
All banks trading on the China Foreign Exchange Trading
System and National International Funding Centre will eventually
be able to trade in the market, including foreign banks, Wang
"In the beginning it will pilot with Chinese banks and
eventually be open to all," Wang told Reuters.
Currently near three-week highs above $1,730 an ounce, spot
gold has gained nearly 11 percent this year, its
safe-haven appeal boosted by a shaky global economy.
INTEGRATE WITH GLOBAL MARKET
China's gold market is expanding because of strong domestic
demand for the metal, said Xie Duo, g eneral director of the
financial market department of the P e ople's Bank of China.
The central bank's policy is to encourage residents to hold
physical gold, he said, but declined to comment on the PBOC's
own gold buying activity.
"Later on, we will further open up the market and quicken
the steps to integrate into the international market," said Xie,
without providing details.
"We should actively create conditions for the gold market to
become integrated with the international gold market."
But Xie said the central bank has not set a timeline for
issuing more gold import licences.
Beijing strictly regulates gold imports and exports and has
so far only given licences to nine commercial banks, including
Industrial and Commercial Bank of China, Bank of China,
Agricultural Bank of China and China Construction Bank.
Still, Chinese banks have been increasing their gold trading
on the domestic over-the-counter (OTC) market.
Chinese banks are also allowed to trade gold on the
international OTC markets for their own books but not allowed to
trade on behalf of their clients, Xie told Reuters.
For now, the central bank has no plan to look into when and
how China would allow commercial banks to trade gold through the
international OTC markets for their clients, Xie said. "That is
not the development direction," he added.
China has official gold reserves of 1,054.1 tonnes, the
world's sixth-largest, which account for under 2 percent of its
total reserves, according to the World Gold Council.
Top gold holder the United States has more than 76 percent
of its reserves in its 8,133.5 tonnes of gold holdings.
(Writing by Manolo Serapio Jr.; Editing by Clarence Fernandez
and Joseph Radford)