Written by: WENJIE

Translated by: billwilliam

Image source: Sina Finance

According to Sina Finance, China Construction Bank issued an announcement on September 13 that starting from October 18, precious metal trading accounts and two-way trading services will be closed for customer accounts with no transaction and no position for 12 consecutive months. Commercial banks are tightening the individual trading of precious metals at full throttle. 

The article cites bank-announced restrictions on the personal trading service of precious metals, including but not limited to the suspension and closing of trading services, the repeal of entrusted brokerage relations, and lowering the size of positions. The reasoning is to protect the rights and interests of consumers and to prevent market risks. Citing the opinions of industry insiders, the article notes several benefits of suspending trading: they believe the banks’ restrictions on related trading will help prevent the risk of fluctuations in the precious metals market; the measure will also remind the investors of risks and implement management for investors; this will reduce potential disputes and the risks of regulatory accountability, and protect the banks’ market reputation.

In my opinion, the banks are trying to deflect their own liability as brokerages in the pretext of customer protection. Last year’s disaster in crude oil futures has exposed the unprofessional trading in precious metals and bulk commodities by banks in Communist China. To avoid the high risks they face, the banks in Communist China simply suspend trading or pass on risks to customers, indicating Communist China’s banking industry’s fear of precious metal trading.

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