New Delhi:
Market regulator Securities and Exchange Board of India (SEBI) has released rules for vault operators that allow exchanges to set up a gold exchange in the country.
This comes after SEBI’s board approved a proposal in September to set up a gold exchange, where the yellow metal will be traded in the form of electronic gold notes and help the exchange have a transparent domestic mechanism for discovering gold. spot prices.
The instruments that represent gold are called electronic gold receipts (EGRs) and are reported as securities. These EGRs will have trading, clearing and settlement characteristics similar to other securities.
Encompassing the entire ecosystem of EGR trading and physical delivery of gold, the gold exchange is expected to create a vibrant gold ecosystem in India.
In a December 31 notice, the regulator said the vault operator will be registered and regulated as an SEBI intermediary for providing vault services intended for gold deposited to create EGRs.
The vault operator’s obligations include accepting deposits, stockpiling and safekeeping of gold, creating and withdrawing EGR, rectifying complaints and periodically reconciling physical gold with the custodian’s records.
Any person wishing to continue the business as a vault operator can apply to SEBI for a certificate of registration.
For eligibility, the regulator said that the applicant will be a legal entity incorporated in India and will have a minimum net worth of Rs 50 crore.
Any certificate of registration issued is valid unless suspended or revoked by SEBI.
“If a vault operator engages in any activity other than those specified in these regulations, then the activities associated with his business as a vault operator shall be separate from and segregated from all other activities, including the reservation of separate space for the storage of gold for trading EGR and warehousing goods for its other business,” it said.
The vault operators must have systems in place to record all transactions in electronic form related to vault services.
They must keep records to ensure gold is traceable; details of gold storage, transfer and withdrawal; purity, amount and weight of deposited gold; and creation and destruction of EGRs.
Furthermore, they must keep these registers and documents for a period of at least five years. They must also adhere to the code of conduct established by the supervisor.
Regarding the deposit of gold in vaults, SEBI said that anyone who wants to create EGRs should request to deposit the gold with the registered vault operator, who will ensure compliance with the gold standard, weigh and check the gold bars as necessary. documentation at the time of deposit of gold.
The vault operator or an authorized person on its behalf will ensure that the gold is only deposited through an accredited refiner or designated agency.
In establishing EGR, SEBI said that every vault manager will have a common interface with the depository for EGR creation and extinction.
Upon acceptance of the depositor’s gold, the vault operator will create an EGR in the name of such depositor as beneficial owner by entering details in the common interface.
With regard to the withdrawal of gold, the regulator said that the beneficial owner who wants to take gold out of the vault will have to file a request with the custodian.