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Proposal For Gold Exchange : SEBI

Proposal For Gold Exchange:

The Securities and Exchange Board of India (SEBI) has proposed a framework for setting up a spot gold exchange.

  • The spot exchange is where financial instruments, such as commodities, currencies, and securities, are traded for immediate delivery.
  • SEBI is a statutory body established in April 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.

The framework of Gold Exchange:

  • In the first tranche, an entity desirous of delivering gold, locally manufactured or imported, on the exchange platform would have to approach a SEBI regulated vault manager and deposit physical gold meeting quality and quantity parameters with it.
  • Against this, the vault manager will issue an EGR (Electronic Gold Receipt), which will be tradeable on the exchanges, in the second tranche.
  • A beneficial owner will surrender the EGR to a vault manager and take delivery of the gold in the third tranche.
  • A common interface will be developed between vault managers, depositories, clearing corporations, and stock exchanges to enable seamless execution of the three tranches.
  • The proposed denominations – reflecting underlying physical gold – of EGRs are 1 kilogram, 100 gram, 50 gram, and subject to conditions, those can also be even for 5 and 10 gram.
  • STT (Security Transaction Tax) will be levied on the trading of the EGR and IGST (Integrated Goods and Services Tax) at the time of delivery.