South Korea's bourse operator, the Korea Exchange, said Friday that it will launch a gold trading platform early next week as scheduled, after a three-week trial period.
Last year, the country's financial authorities unveiled a plan to set up a gold trading platform in line with the government's efforts to bring the underground economy into the open and squeeze taxes out of the market where tax evasion is rampant and dominated by illegal transactions.
According to the exchange, 1 gram units of bullion of 99.99 percent purity will be used to facilitate liquidity and delivery will be made in 1 kilogram bars.
Trading will be made from 10 a.m. to 3 p.m. starting Monday, and transaction fees will be exempted for a year through March next year, it said.
Along with futures firms, securities firms, gold dealers, importers and wholesalers, local refiners approved by the authorities can be registered as a member of the spot gold bourse and engage in buying or selling spot gold like stocks.
They are required to deposit their gold in a depository, with buyers bidding for ownership in the depository, according to the Korea Exchange.
As for now, eight securities firms and 49 dealers, importers and wholesalers are registered as a member of the bourse, the KRX said.
Retail investors will be allowed to participate in the gold exchange, but only if they trade gold through financial firms, according to the exchange. Investors are also required to pay 10 percent value-added tax when they take physical delivery of gold purchased on the exchange.
Investors can take physical delivery of gold from the Korea Securities Depository Corp.'s offices in Seoul and five other cities across the nation.
South Korean individuals hold an estimated 720 tons of gold, seven times the 104 tons kept at the central bank. South Korea's gold trading volume reaches some 100 tons on an annual basis, about 70 percent of which is believed to be illegally traded without being taxed.
Previously, the government estimated tax evasion from such illegal trade to be close to 330 billion won ($311 million). (Yonhap)