The board of markets regulator Sebi has given its nod to start a gold trading platform on which the yellow metal could be traded in electronic form, called electronic gold receipts (EGRs), which could also be exchanged for physical gold by its holders. The concept, if successful, could lead to better discovery of spot price of gold in India. This could also lead to launch of derivatives products on gold.
Along with its nod for EGRs, the Sebi board also cleared a framework for vaults that would play a very important role of storing the physical gold that will guarantee each EGR traded on gold exchanges. In February this year, finance minister Nirmala Sitharaman had entrusted Sebi the responsibility to set up an exchange for trading in gold.
In the same board meet, the nod for the launch of exchange-traded funds for silver were also cleared. The rules for silver ETFs would be similar to the one for gold ETFs, but not exactly the same, Sebi said.
“EGRs will have the trading, clearing and settlement features akin to any other securities (like stocks, commodities, etc),” Sebi chairman Ajay Tyagi said.
A Sebi release further added that any stock exchange could launch trading in EGRs in a separate segment. The denomination for trading and conversion of it into physical gold could be decided by the bourses with Sebi’s approval.
The exchanges trading in EGRs could emerge to be national platforms for buying and selling these with underlying standardised gold in India, Sebi said.