After a prolonged delay, the country’s first gold spot exchange will become a reality with Prime Minister Narendra Modi set to inaugurate it at the International Bullion Exchange at GIFT-International Financial Services Centre (GIFT-IFSC) on July 15. The IFSC regulator IFSCA has already approved 56 qualified jewellers to import bullion and transact on the exchange. The RBI guidelines has enabled qualified jewellers to import gold through IIBX or other exchanges approved by IFSCA and the Directorate General of Foreign Trade.

The initial pilot trading at the exchange with small transactions in last few months has been successful, sources said.

Holding co to be set up

Earlier, National Stock Exchange, Multi Commodity Exchange, India INX International Exchange, National Securities Depository and Central Depository Services Ltd have joined hands to establish the holding company, India International Bullion Holding IFSC, which will set up and operate the International Bullion Exchange.

The exchange has two vault operators -- Sequel Global and Brinks India – and the regulator is in the process of approving another vault operator, sources said. The regulator will also approve setting up of a bullion refinery in the GIFT-IFSC, he added.

Once the gold is imported by the authorised entities it will be deposited at one of the vaults which will issue bullion depository receipts. These receipts will be traded in dollar on the exchange.

Being a spot exchange, all the open positions will be marked for delivery at the end of the day. The exchange will provide a transparent and efficient platform for price discovery with assured quality.

‘No impact on gold futures’

Naveen Mathur, Director (Commodities and Currencies), Anand Rathi Shares and Stock Brokers, said the spot exchange at IFSC will not have any impact on gold futures as it is a tool for hedging while the spot exchange will be used by the industry for sourcing the yellow metal.

Qualified jewellers with net worth of ₹25 crore and 95 per cent of revenue from jewellery and NRIs with $5 lakh net worth can trade in the exchange, provided, they want to take delivery, he added.

Going ahead, the government may consider routing all the imports through the exchange. It makes sense for the exporters also to sell through the exchange as they will find more buyers, sources said.

In August 2020, the Centre had allowed GIFT-City regulator International Financial Services Centre Authority to regulate these two financial products — billion spot delivery contracts and bullion depository receipts. Last December, IFSCA notified regulations for setting up of bullion exchange including that of Clearing Corporation, Depository and Vaults.

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