Leading stock exchange BSE on Monday said it has received the final approval from the capital markets regulator SEBI for introducing the Electronic Gold Receipt (EGR) on its platform.
This comes after the BSE received in-principle approval from the Securities and Exchange Board of India (SEBI) in February, after which the exchange conducted several mock trading sessions in the test environment for its members to facilitate trading in EGRs.
EGRs will cater to all market participants, which means that buyers and sellers on the exchange will include individual investors, as well as commercial participants along the value chain like importers, banks, refiners, bullion traders, jewellery manufacturers, and retailers, BSE said in a statement.
Gold wallows at 2-1/2-year trough on dollar strengthGold prices have fallen nearly 20 per cent since scaling above the key $2,000 per-ounce mark in March
"We are extremely thankful to Sebi for giving us the final approval and confidence that we will be able to launch the trading in EGR soon, as gold holds special significance for Indian households," Sameer Patil, CBO at BSE, said.
The EGR platform will lead to greater assurance in the quality of gold supplied, efficient price discovery, and transparency in transacting. This can create a vibrant gold ecosystem in India by enabling actual fungibility of gold, which is the need of the hour, he added.
BSE said it is working with all depositaries and vaults to ensure the development of the entire ecosystem around EGR trade, including depositaries, vault managers, traders, bullion dealers, and jewellers.
India is the second largest consumer of gold globally with an annual gold demand of approximately 800-900 tonnes and holds an important position in the global markets.
The country has remained a price-taker in the global markets, and at present, does not play any significant role in influencing the price-setting for the commodity.
A platform for EGR infuses transparency in gold spot transactions, enables India to emerge as the price setter, and would eliminate existing market inefficiencies.