Q. Consider the following statements:
1. These are electronic receipts issued on the basis of a deposit of underlying physical gold.
2. Gold Exchange would be an international platform for buying and selling EGRs issued against physical gold.
Which of the statements given above is/are correct?
Answer: A
Notes:
About the Electronic Gold Receipts (EGRs) and Gold Exchange:
- These are electronic receipts issued on the basis of a deposit of underlying physical gold. EGRs would pave the way for the operationalization of a gold exchange in India.
- Gold Exchange would be a national platform for buying and selling EGRs issued against physical gold.
- Investors can trade in EGRs on stock exchanges and the proposed gold exchange.
- The transaction in a gold exchange has been divided into three parts:
- Conversion of physical gold into EGR;
- Trading of EGR on a stock exchange;
- Conversion of EGR into physical gold.
- SEBI would regulate the entire ecosystem of the proposed gold exchange. It would be the sole regulator for the exchange, including for vaulting, assaying gold quality and fixing delivery standards.
Key features of the Gold Exchange
- Stock exchanges can launch contracts of different denominations for trading and conversion of EGR intogold.
- SEBI has brought in fungibility and interoperability between vault managers for the ease of investors.
- Physical gold deposited at one location can be withdrawn from a different location of any vault manager.
Benefits of Gold Exchange
Gold exchange is expected to offer a lot of benefits such as efficient and transparent price discovery, investment liquidity and assurance in the quality of gold. It is also expected to create a national pricing structure for gold. It will also promote compliance among market participants.
Source: EPIC January 2022
