SEBI Gives Nod To BSE For Introducing Electronic Gold Receipt

Capital markets regulator SEBI has given in-principle approval to BSE for introducing Electronic Gold Receipt (EGR) on the stock exchange's platform.

 For final approval for the introduction of the EGR segment, the exchange has been advised to submit additional information, according to a regulatory filing on Thursday. SEBI, in January, came out with a framework for operationalising the gold exchange, wherein the yellow metal will be traded in the form of EGRs.

Also, the regulator has notified rules for vault managers paving the way for operationalising of the gold exchange.

"SEBI via its letter dated February 9, 2022, has granted its in-principle approval for introducing EGR segment on BSE Limited," the exchange said.

Under the rules, the entire transaction has been divided into three tranches -- the creation of EGR, trading of EGR on the stock exchange and conversion of EGR into physical gold.

The bourses can launch contracts with the different denomination for trading or conversion of EGR into gold.

The source of supply of the physical gold to be converted into EGR will be the fresh deposit of gold coming into the vaults, either through imports or through stock exchanges-accredited domestic refineries.

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.

To lower the costs associated with the withdrawal of gold from the vaults, EGRs have been made "fungible" and "interoperability between vault managers" have been allowed. In October 2021, BSE Chief Business Officer Sameer Patil had said the exchange is ready with its technology to introduce EGRs on its platform, which will help in creating a uniform price structure of the yellow metal across the country.