{"id":6689,"date":"2021-07-06T09:09:10","date_gmt":"2021-07-06T09:09:10","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=6689"},"modified":"2021-07-06T09:13:32","modified_gmt":"2021-07-06T09:13:32","slug":"sebis-suggested-framework-for-gold-exchange","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/","title":{"rendered":"SEBI\u2019s Suggested Framework for Gold Exchange"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The capital market regulator, SEBI, has suggested a comprehensive framework to create a gold exchange in India. Besides the issuance of a discussion paper on the gold business, the regulator has emerged with draft norms for vault managers. So what does it mean, and how it will affect you? In this article, we will find this.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4ebd448495c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4ebd448495c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#How_does_it_Impact_You\" title=\"How does it\nImpact You?\">How does it\nImpact You?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#What_is_the_Meaning_of_Gold_Exchange\" title=\"What is the Meaning of Gold Exchange?\">What is the Meaning of Gold Exchange?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#How_Can_You_Investment_in_a_Gold_Exchange\" title=\"How Can You Investment in a Gold Exchange?\">How Can You Investment in a Gold Exchange?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#Suggested_Framework_of_SEBI_on_the_Gold_Exchange\" title=\"Suggested Framework of SEBI on the Gold Exchange\">Suggested Framework of SEBI on the Gold Exchange<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#What_are_the_Pros_and_Cons_of_Establishing_a_New_Stock_Exchange_for_Digital_Gold_Receipts\" title=\"What are the\nPros and Cons of Establishing a New Stock Exchange for Digital Gold Receipts?\">What are the\nPros and Cons of Establishing a New Stock Exchange for Digital Gold Receipts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#SEBIs_Additional_Plan_of_Action\" title=\"SEBIs\nAdditional Plan of Action\">SEBIs\nAdditional Plan of Action<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/sebis-suggested-framework-for-gold-exchange\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_it_Impact_You\"><\/span>How does it\nImpact You?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the near future, you would be able to transform physical gold into electronic gold receipts. Moreover, you can also invest in gold as equity shares &amp; convert the shares back to physical gold. According to the suggested framework of SEBI, trading in gold through digital receipts creates a precise domestic spot price discovery mechanism.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Meaning_of_Gold_Exchange\"><\/span>What is the Meaning of Gold Exchange?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One can invest in gold as equity shares via a gold exchange. It delivers trading facilities wherein retail investors, banks, <strong><a href=\"https:\/\/swaritadvisors.com\/foreign-portfolio-investor-registration\" class=\"text-primary\">Foreign Portfolio Investors<\/a><\/strong>, bullion dealers, and jewellers can trade in gold through the exchange. It can create a vivacious gold system in the nation, and it is also essential considering the fact that India is the second-largest consumer of gold across the world.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Can_You_Investment_in_a_Gold_Exchange\"><\/span>How Can You Investment in a Gold Exchange?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nSEBI (Securities and Exchange Board of India) has proposed to create an instrument\nknown as the <strong><em>EGR (Electronic Gold Receipt) <\/em><\/strong>on the bourse or gold exchange.\nThe trading instrument is divided into three different tranches. The first\ntranche is where the gold (in physical form) can be converted into a digital\ngold receipt. Moreover, the SEBI (Securities and Exchange Board of India) has\ninformed to create a benchmark interface among depositories, clearing\ncorporations, vault managers and stock exchanges.<\/p>\n\n\n\n<p>You\nhave the digital gold receipt listed and invested on the bourse, and the bourse\nwill obtain detailed information regarding the electronic gold receipts from\nthe depository concerned every day in the second tranche. Such trades would be\nsettled by the clearing corporation.<\/p>\n\n\n\n<p>One\ncan transform the digital gold receipts back to physical gold in the third\ntranche. The beneficial proprietor surrenders the digital gold receipts to the\nvault manager, who delivers the gold &amp; extinguishes the digital gold\nreceipts. Goods and Service Tax (GST) will be appropriate on the conversion of\nthe digital gold receipts into physical gold during withdrawal. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Suggested_Framework_of_SEBI_on_the_Gold_Exchange\"><\/span>Suggested Framework of SEBI on the Gold Exchange<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>After the Budget announcement, the Securities Exchange Board of India had constituted two working groups involving all stakeholders for the suggested gold exchange framework. Moreover, it has issued a consultation paper after considering the recommendations of the groups. Securities Exchange Board of India has sought comments on the opening of existing or new exchange stock bourses to be allowed to deal with the digital gold receipts.<\/p>\n\n\n\n<p>Further,\nthe Securities Exchange Board of India has also said that vault managers must\ncreate digital gold receipts only against the physical gold in the vaults, and\nelectronic gold receipts of denominations of 1 kg, 100 grams &amp; 50 grams\nwill be available on the exchange. Trading digital gold receipts and converting\ndigital gold receipts into physical gold shall be in the same denomination.<\/p>\n\n\n\n<p>Securities\nExchange Board of India is seeking to attract more players and especially retail\ninvestors to the suggested market. Digital gold receipts of a small\ndenomination like 5 and 10 grams may also be allowed for trading reasons.\nMoreover, the Securities Exchange Board of India mentioned that the conversion\nfrom digital gold receipts to physical gold would be allowed only for\nbeneficial owners who collect a minimum of 50 grams of physical gold in the\ndigital form.<\/p>\n\n\n\n<p>Another\nsuggestion is that in the case of existing stock exchanges are allowed to deal\nwith digital gold receipts if the contract must be launched in the new sector\nor allowed to be added as a fresh asset class in the present segment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Pros_and_Cons_of_Establishing_a_New_Stock_Exchange_for_Digital_Gold_Receipts\"><\/span>What are the\nPros and Cons of Establishing a New Stock Exchange for Digital Gold Receipts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the <strong>SEBI<\/strong><sup><a href=\"https:\/\/www.sebi.gov.in\/\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>, establishing a new stock exchange only for digital gold receipt has the following advantages:<\/p>\n\n\n\n<ol><li>Increased\nLiquidity;<\/li><li>Decreased\nmarket fragmentation;<\/li><li>Good\ndelivery standard;<\/li><li>Single\nreference price.<\/li><\/ol>\n\n\n\n<p>But<strong>, <\/strong>SEBI (Securities &amp; Exchange Board\nof India) has also accepted the fact that it has certain disadvantages or cons\nas well, and you can check the same below:<\/p>\n\n\n\n<ol><li>Require\nFresh Investments;<\/li><li>Time-Consuming;<\/li><li>Registering\nnew members will increase the cost of compliance and is not a feasible option\nfor just one product.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SEBIs_Additional_Plan_of_Action\"><\/span>SEBIs\nAdditional Plan of Action<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nregulator of the market has invited views of tax incentives to make the digital\ngold receipts market liquid for companies. Another piece of recommendation is\nthat electronic gold receipts be made exchangeable with interoperability among\nthe vault managers. <\/p>\n\n\n\n<p>Securities\nand Exchange Board of India has appeared with regulations of the draft,\nconsisting of registration, infrastructure necessities, and criteria for total\nworth, SOPs (Standard Operating Procedures), security deposit and the issuance\nof the digital gold receipts. Moreover, the SEBI (Securities and Exchange Board\nof India) has proposed maintaining records, stated code of conduct and\nguidelines on separation of gold and non-gold exchange businesses.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI (Securities &amp; Exchange Board of India) has sought public comments on essential problems of the gold exchange. It can be ended up with the proposed framework of the Securities and Exchange Board of India may aid to create a vivacious gold ecosystem in India. Moreover, you can also invest in gold as equity shares &amp; convert the shares back to physical gold. According to the suggested framework of SEBI, trading in gold through digital receipts creates a precise domestic spot price discovery mechanism. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/sebis-new-risk-matrix-to-classify-debt-schemes\/\">SEBI\u2019s New Risk Matrix to Classify Debt Schemes<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The capital market regulator, SEBI, has suggested a comprehensive framework to create a gold exchange in India. Besides the issuance of a discussion paper on the gold business, the regulator has emerged with draft norms for vault managers. So what does it mean, and how it will affect you? In this article, we will find [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":6690,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[64],"tags":[737],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/6689"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=6689"}],"version-history":[{"count":5,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/6689\/revisions"}],"predecessor-version":[{"id":6696,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/6689\/revisions\/6696"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/6690"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=6689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=6689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=6689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}