He, however, added, “There is likely to be a gestation period of six to eight months for the first spot trade in bullion to happen.”
The notification allows trading in bullion depository receipt with underlying bullion, which means traders can deliver gold through depository receipts. These receipts will be listed on the bullion exchange. IFSCA will hold discussions with all stakeholders before finalising the regulations for the new exchange as well as trading and financing norms.
Bullion financing, bullion-based loans, bullion loans against collateral, bullion vaulting, clearing and settlement services in relation to bullion spot delivery contracts and bullion depository receipts — all of these have been allowed. Bullion will include gold, silver and the regulator can also allow doré or unrefined gold. Price settlement and delivery can be on the same or the next day.
Already two large vault services facilitating companies have set up shop at GIFT City. All major commodity exchanges, such as MCX and India INX, are awaiting the final norms. As is Dipesh Shah, whom the NSE appointed head of international business and strategies for NSE-IFSC International Exchange last month.
“As a part of the BSE group, India INX will be interested in setting up the International Bullion Exchange,” says V Balasubramaniam, MD, India INX. “We will seek clarity from the IFSC authority before finalising our plans.”
The India Gold Policy Center at the Indian Institute of Management Ahmedabad (IIM-A) had proposed setting up a gold spot exchange at GIFT City. “As volume, number and value of transactions on the exchange grow, it will act as the place that people look to get indications of price — the same way that currently, the industry and trade looks to COMEX, or MCX or Zaveri Bazaar,” says Arvind Sahay, chair, India Gold Policy Center, IIM-A.
The Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) have said that regulating spot trading of gold isn’t under their purview, which was one of the reasons that delayed the spot trading exchange.