Sebi readies plan for operationalising gold exchange

TIL Desk/Business/New Delhi/ Capital markets regulator Sebi on Monday came out with a framework for operationalising the gold exchange, wherein the yellow metal will be traded in the form of electronic gold receipts (EGRs).The stock exchange desirous of trading in EGRs may apply to Sebi for approval of trading in the new segment, the regulator said in a circular.

The bourses can launch contracts with different denomination for trading or conversion of EGR into gold. Under the new framework, the entire transaction has been divided into three tranches– creation of EGR; trading of EGR on stock exchange and conversion of EGR into physical gold.

A common interface will be developed by depositories, which will be made accessible to all the entities — vault  managers, depositories, stock exchanges and clearing corporations. The new framework will come into force with immediate effect, the Securities and Exchange Board of India (Sebi) said.

This comes after the government, through a notification on December 24, declared “electronic gold receipts” as ‘securities’ under the Securities Contracts (Regulation) Act 1956. Separately, the regulator through a notification on December 31, notified rules for vault managers paving the way for operationalising gold exchange.