Photographer: Jerome Favre/Bloomberg Haywood Cheung, president of the Chinese Gold & Silver Exchange Society. Hong Kong’s Chinese Gold & Silver Exchange Society was given permission to set up a precious metals vault in Shenzhen,China, becoming the first non-mainland bourse granted onshore commodity warehousing access. Local government authorities and the People’s Bank of China Shenzhen branch approved the exchange’s plan to build the 1,500-ton facility to store gold and silver in Qianhai, a special economic zone on the west of Shenzhen, according to Haywood Cheung, president of the CGSE. Construction will begin next year and take about 18 months, he said. China, which overtook India as the biggest gold user last year, is starting gold trade in the Shanghai free-trade zone this month as the country seeks to exert its influence over prices while expanding theyuan’s role in global trade. Bullion rose 2.8 percent this year after slumping 28 percent in 2013. “We have to enter into China,” Cheung said from Hong Kong in a Sept. 8 telephone interview. “My duty is to lead our members and in turn their clients, their international clients, into China.” The China Securities Regulatory Commission bars foreign exchanges from licensing mainland storage facilities for commodities. While the authority has given no indication it will rescind the ban, Cheung said that physical gold and silver facilities fall outside the CSRC’s jurisdiction. Wang Jinxia, spokesman for Shenzhen municipal government branch that oversees development in Qianhai, couldn’t comment when contacted by Bloomberg News. A person in the office handling media queries for PBOC’s Shenzhen branch declined to comment.Trading Platform The Hong Kong exchange will also set up its Qianhai trading platform in the next couple of months and register between 50 and 60 of its 171 members in the zone by the middle of October, Cheung said at a CGSE event in Hong Kong yesterday. The cost to set up the Qianhai bourse and vault will be around HK$1 billion ($129 million), which will be paid by its members, Cheung said. The Hong Kong bourse has an average daily trading volume of about HK$100 billion and the new trading platform may boost trading amounts by two or three times, Cheung said at the event.link