gold exchange in India: The Securities and Exchange Board of India said that the government has notified the Electronic Gold Receipts (EGR) and SEBI (Vault Managers) Regulations, 2021, as securities, to enable gold exchange in India. The way of operation has been cleared. An EGR refers to the issuance of an electronic receipt based on a deposit of physical gold. The market regulator has also released the framework for gold exchange.
Gold Exchange will be the national platform for buying and selling EGR
As per SEBI’s framework, the gold exchange will be a national platform for buying and selling of EGR. EGR will be issued in lieu of physical gold. According to SEBI, investors can trade in EGR on existing stock exchanges as well as on the proposed gold exchange.
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Transaction will be done in three phases
According to the circular, the entire transaction on the gold exchange is divided into three phases – conversion of physical gold into EGR, trading of EGR on the stock exchange and conversion of EGR into physical gold. The entire ecosystem of gold exchange will be regulated by SEBI, which will be the sole regulator for gold exchange. This includes Vaulting, Assaying, Gold Quality and Delivery Standards. Meanwhile, stock exchanges have been allowed to start trading and/or launch contracts with various denominations to convert EGR into gold.
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Investors will be able to withdraw deposited gold from anywhere
Under the framework, an EGR will not be linked to a unique bar reference number of physical gold. For the convenience of investors, SEBI will issue orders for withdrawal of gold deposited at one place from the same or other vault managers. Sebi said in the circular, this provision will enable the depository to withdraw physical gold from the preferred vault location of the buyer. According to experts, in the current format, gold transactions outside recognized vaulting loops are all based on bilateral agreements and trust.
Also beneficial for gold jewelery manufacturers and retailers
Sudheesh Nambiath, Head, India Gold Policy Center at IIM Ahmedabad said, “Gold is going to be the most efficient way for jewelery manufacturers and retailers to manage their inventory requirements. This will eliminate the risks associated with counter party risk such as cancellation of delivery, ensure transparent pricing through the exchange platform, access to standard bars.”
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