Mumbai: Sebi gave its nod to set up a Gold Exchange, which is expected to create a vibrant gold ecosystem in India commensurate with the country’s large share of global gold consumption.

The capital markets regulator, the Securities and Exchange Board of India (Sebi), on September 28 came out with a series of significant guidelines.

Sebi gave its nod to set up a Gold Exchange, which is expected to create a vibrant gold ecosystem in India commensurate with the country’s large share of global gold consumption.

The Gold Exchange would be a national platform for buying and selling Electronic Gold Receipts (EGRs) with underlying standardized gold in India and will also create a national pricing structure for gold.
The Gold Exchange is expected to offer a host of benefits, including efficient and transparent price discovery, liquidity, assurance of the quality of gold and others, said Ajay Tyagi, chairman, Sebi, while addressing the media after a board meeting held in Mumbai.

EGRs will be notified as “securities” under the Securities Contracts (Regulation) Act, 1956. They will have trading, clearing and settlement feature just like other “securities”. Any recognized stock exchange can launch trading in EGRs in a separate segment. The denomination for the trading of EGRs and conversion of EGR into gold can be decided by the recognized stock exchanges, with the approval of Sebi.

The Clearing Corporation of India will settle the trades executed on the stock exchanges. The EGRs will have perpetual validity. On surrender, the EGR holder will be able to withdraw underlying gold from the vaults.

Silver ETFs

Sebi has allowed the introduction of silver ETFs in India. The Sebi board approved the amendment to Sebi (Mutual Funds) Regulations, 1996 to enable the introduction of Silver ETFs. These will be in line with the regulatory mechanism for gold ETFs.