The board approved the Gold Exchange and SEBI Vault Managers Regulations, 2021 that allow bourses to set up a gold exchange in India.
Under the framework, the instrument representing gold will be called electronic gold receipt which will be considered securities. Further, these EGRs will have clearing, trading and settlement processes like any other security.
Any recognized stock exchange, existing or new, can launch trading in electronic gold receipts in a separate segment, SEBI said in a press statement.
SEBI said that the denomination for trading of the EGR and conversion into gold will be decided by the stock exchange with approval by the market regulator. Further, investors will be allowed to hold the EGRs for as long as they deem fit.
The capital market regulator also said that EGRs will be fungible and inter-operability between vault managers will be allowed to lower the cost of transactions.
“The Gold Exchange is expected to create a vibrant gold ecosystem commensurate with India’s large share of gold consumption,” the market regulator said.
Under the regulation for vault managers, SEBI said that entities applying to be vault managers should have a net worth of Rs 50 crore or more. Further, they should be a body incorporated in India and will be regulated by SEBI as an intermediary.
Vault managers will be responsible for accepting deposits, storage and safekeeping of gold, creation of EGRs, withdrawals, and grievance redressal.