Mumbai: SBI boards on Tuesday clean up proposals to prepare gold exchanges where yellow metals will be traded in the form of electronic gold acceptance and exchanges will help in having a mechanism for the discovery of transparent domestic prices.
The instrument that represents gold will be called electronic gold receipts (EGRS) and will be told as a securities, the chairman of Ajay Tyagi said at a press conference after the council meeting.
“EGRS will have trade features, clearing and completion similar to other securities,” he said.
Stock Exchange recognized, existing and new, can launch trade in EGR in a separate segment.
Denomination for EGR trading and EGR conversion to gold can be decided by stock exchanges with SBI approval.
Gold exchanges, which include the entire EGR trade ecosystem and physical delivery of gold, is expected to create a dynamic gold ecosystem in India, said Sebi.
According to the regulator, the exchange will be a national platform to buy and sell EGR with the underlying standard gold in India and also create a national price setting structure for gold.
“Gold exchanges are expected to offer a number of benefits for value chain participants as well as for the entire gold market ecosystem such as the discovery of efficient and transparent prices, investment liquidity, guarantees in gold quality etc.,” Sebi said.
Clearing Corporation will complete trade executed on the stock market by transferring EGR and each fund to buyers and sellers.
EGR holders can continue to hold EGRS during the intended because EGR will have eternal validity.
Such holders at the discretion can also attract the underlying gold from the safe after giving up EGR.
To reduce the costs associated with the withdrawal of gold from the safe, Sebi said EGR will be made “Fungible” and “interoperability between Vault Managers” will be permitted.
Spell criteria for manager Vault, Sebi said Vault manager must be a body incorporated in India and must have a net worth of at least Rs 50 Crore.
Vault managers will be registered and arranged as securities to provide dome services intended for paid-in gold to create EGR.
The obligation of Vault managers includes receiving deposits, storage, and gold storage, creation and withdrawal of EGR, redressal complaints and physical gold reconciliation with storage records.
Presenting the budget for 2021-22, Minister of Finance Nirmala Sitharaman said that Sebi will be a regulator for gold exchanges and the development of warehousing and supervisory authorities (WDRA) will be strengthened to regulate commodity market ecosystems.