Related readings:  Gold exchange considers derivatives trading   Gold glitters as stocks lose luster Find more in Markets Watch

"It will help combine the domestic and overseas gold market, increase the market liquidity and reduce transaction risks," said Zhou Hongtao, a gold investment analyst.

Zhou said the foreign members would bring advanced trading and managerial experience and contribute to leveling off the price gap between domestic and overseas markets.

The central bank has told SGE to set up as soon as possible a regulatory plan for qualification of foreign members and submit the plan to the central bank for approval.

The central bank said the plan would be put on record with the State Administration of Foreign Exchange along with the results of foreign members' qualification examinations submitted by SGE.

An official with SGE said that, so far, several foreign banks including HSBC and Standard Chartered Bank had contacted the exchange.

Meanwhile, SGE is negotiating with its Hong Kong counterpart and the Airport Authority Hong Kong for future cooperation in trading, clearing and delivery, said the official.

SGE, approved by the State Council and founded by the People's Bank of China, is a non-profit and self-managing legal entity which organizes gold, silver and platinum transactions.

SGE adopts a membership system. Its members consist of qualified commercial banks and corporations registered in China. They are licensed to produce, smelt, process and trade precious metals including gold, silver and platinum.

SGE now has 150 members.

(For more biz stories, please visit Industry Updates)