India is the world’s second-largest gold consumer. It also has a significant presence on international markets. Investors in the country will soon be able to trade gold on the spot market. Market regulator SEBI’s board approved the framework for bringing gold exchanges. Now like shares, gold can also be bought and sold. The Gold Exchange works in a similar way to a traditional stock exchange.
What is EGR?
A regulatory framework for establishing a gold exchange has been proposed by SEBI. The government wants India’s huge physical market influence for gold to be visible in the financial market. It’s another way to persuade people not to hoard gold by establishing an exchange with transparent pricing and liquidity.
How will it function?
Gold exchange works similar like a stock exchange. In this, people place orders for buying and selling of gold. The Clearing Corporation will then settle the EGR and funds between the buyer and seller as per the order. After settlement, EGR will be credited to the demat account of the buyer. Buyer can keep gold as EGR for as long as it wants. Later, EGR can be converted into the physical gold. Whenever you wish, you can surrender the EGR and get its physical delivery done.
Who will be responsible for EGR?
A company with a net worth of more than 50 crores can become a wallet manager in the Gold Stock Exchange. Vault Managers will be responsible for the creation of EGR, its deposit and withdrawal, storage and security as well as grievance redressal.
How will it benefit?
After the clearance of gold exchange, the investors along with gold market will get several benefits. With the formation of a gold exchange, prices will be fixed in a transparent manner. The purity of gold will also be ensured. The value of gold that will be known by trading on the exchange can be known as India Gold Price. Currently, the price of gold varies from city to city, which is decided by the jewelers.
