India has notified electronic gold receipts (EGRs) as securities and issued guidelines for their trading.
According to a circular issued by India’s capital market regulator Securities and Exchange Board of India (SEBI) on Monday, EGRs with underlying standardized gold will be issued against physical gold, and they can be traded on the existing stock exchange as well as the proposed gold exchange.
The entire transaction consists of parts — conversion of physical gold into the EGR, trading of EGR on the stock exchange and conversion of the EGR into physical gold, said the circular.
SEBI will be the sole regulator for gold exchange including vaulting, assaying, gold quality and delivery standards.
Stock exchanges will be allowed to launch contracts with different denominations for trading and conversion of the EGR into gold.
SEBI has also brought in fungibility and inter-operability between vault managers, who will be registered and regulated by it.
The obligations of the vault manager include accepting deposits, storage and safekeeping of gold, creation as well as withdrawal of the EGR.
India is the world’s second largest consumer of gold. In 2021, it imported 1,050 tons of gold worth a record 55.7 billion U.S. dollars, compared to 430 tons worth 22 billion U.S. dollars in the previous year.
Source: Xinhua
