SEBI releases new framework for gold exchange for gold trading
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Gold Exchange: Capital markets regulator SEBI has released the operational framework of the Gold Exchange for trading in the electronic form of gold. In this market gold will be traded in the form of Electronic Gold Receipt (EGR). The Securities and Exchange Board of India (SEBI) said in a circular that those who are willing to start trading in the stock market EGR can apply for it.
One can initiate contracts with different amounts to trade in the stock market or convert EGR into gold. Under the new framework, the entire transaction will take place in three phases… preparation of EGR, trading in EGR in the stock market and converting EGR into physical gold…
Depositories will develop a common platform, this platform will be accessible to all. This includes depositories, stock exchanges, clearing corporations, ‘vault’ managers. The job of a ‘vault’ or ‘strong room’ manager is to keep the gold at recognized storage locations. The ‘Vault’ manager will have to hold the gold in the manner prescribed by SEBI. Along with this, it will also be their responsibility to ensure the quality.
SEBI said that the new legislation will come into force with immediate effect. Earlier, the government had declared electronic gold receipt as a security under the Securities Contracts (Regulation) Act, 1956 through a notification on December 24. The regulator had separately notified rules for ‘vault’ managers on December 31.
As per the SEBI circular, the physical supply of gold will be the fresh deposits of gold. This will be converted into EGR. The gold will be supplied either in vaulted or strong form through imports or through stock exchange recognized domestic refineries. Gold stored in the vault can be considered for converting into EGR. The ‘Vault’ manager will ensure that they meet all the criteria when converting gold into EGR.
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