HSBC wins China approval for Shanghai gold trading

SHANGHAI, June 5 (Reuters) - HSBC Holdings Plc (HSBA.L) (0005.HK) has won the Chinese banking regulator's first approval for a foreign bank to trade gold on the Shanghai Gold Exchange <SGE/MENU>, Europe's largest bank said on Thursday.

The bank conducted its first gold trading on the exchange on Thursday, a company official said.

HSBC and Standard Chartered (STAN.L) had received approval from China's central bank for membership in the Shanghai exchange in February.

"This is an extremely important development both for HSBC in terms of its global precious metals services as well as for the Shanghai Gold Exchange in terms of the increased liquidity and competitiveness this brings to the China market," Jeremy Charles, the bank's global head of precious metals, said in a statement.

The Shanghai Gold Exchange, China's largest precious metals bourse, has been planning a market-making system, which aims to draw big players to boost its gold trading volume.

A market maker quotes both buying and selling prices for a financial instrument or commodity, hoping to make a profit on the bid/offer spread. Most exchanges operate on a matched-bargain or order-driven basis. (Reporting by Steven Bian, writing by Alfred Cang; Editing by Edmund Klamann)