The Shanghai Gold Exchange, the mainland's biggest precious metals market, aims to bring in its first group of foreign banks as members this year, spokesman Tong Gang said on Wednesday.

The exchange had received applications from foreign institutions, and had identified five banks as preferred members, including UBS, HSBC Holdings, Bank of Nova Scotia, Societe Generale and Standard Bank Group, Mr Tong said.

"We believe more foreign banks and institutions will become members in the future, not just those five," he said.

The exchange had completed preparatory work and was awaiting regulatory approval, he said.

"Hopefully, we will receive approval this year," he said. "It may take a little while for the regulator to work out implementation details."

The banks would trade on the exchange with quotas under the qualified foreign institutional investor scheme, according to the China Business News. Their trading seats required the approval of the China Banking Regulatory Commission, it said.

Established in October 2002, the Shanghai Gold Exchange offers cash and cash-deferred contracts for gold, platinum and silver. It has 128 members, including miners, jewellers and financial institutions, according to its website.

Last year, the exchange reported total gold trade of 1,249.6 tonnes with a transaction value of 194.75 billion yuan. Including other precious metals, the exchange's turnover exceeded 200 billion yuan, with Bank of China its top trader.

The exchange is considering extending trading hours and introducing foreign institutions as members to better integrate with international markets. It is also studying gold-linked financial products as a way of tapping the mainland's individual and corporate savings.

The People's Bank of China said in March the government would gradually relax controls on the import and export of gold and has called for the development of gold futures and options.