InvestorQ : Can you tell me about the electronic gold receipts launched by the BSE?
Anjana Aiyar made post

Can you tell me about the electronic gold receipts launched by the BSE?

Khushi Patel answered.
2 months ago

BSE has received approval from SEBI to launch the Electronic Gold Receipts (EGRs) on its platform. EGRs were announced in the last Union Budget as an attempt to create an electronic market for trading spot gold. The EGRs represent gold in a fungible manner. EGRs would be classified as securities under the SCRA and would be traded as securities on the stock exchange with the same quality of clearing and settlement system along with a counter guarantee given by the clearing corporation for all the trades.

BSE had got in-principle approval from SEBI for launch of Electronic Gold Receipts (EGRs) in February 2022, it had to conduct several mock trading sessions in the test environment. It was only after these test results were shared with the regulators and the regulators were convinced with process flow, that final approval to launch the EGRs was given. The idea here is to facilitate creation of a spot gold exchange in India via electronic gold receipts. While one can trade gold futures on the MCX and NCDEX or exchange traded funds (ETFs) on the stock exchange platform, there is no mechanism to trade spot gold. EGRs offer that.

The first step would be to put the ecosystem in action. After there are a number of stakeholders in the process including the depositories, vault managers and traders. The bottom line is that EGR offers a guaranteed platform and a transparent mechanism for trading in spot gold.