SEBI has prepared the framework of Gold Exchange, know why it is important?

Being a large gold consumer and importer country, gold exchange in India has particularly important advantages.

The dream of starting a gold exchange in India may come true soon. Taking important steps in this direction, SEBI on Monday prepared the framework for this exchange. Please tell that during the budget in February, Nirmala Sitharaman had announced to make SEBI the regulator of the proposed gold exchange. Let us understand the important aspects of the proposed framework and the specifics of the gold exchange-

We are hoping to know that this exchange can take shape by the end of this year.

Gold will be traded in the form of electronic gold receipt

The sale of yellow metal in the proposed gold exchange will be in the form of electronic gold receipt (EGR). These receipts will be used as 1 kg, 100 grams and 50 grams of gold. Along with this, EGR can also be made available in denominations of 5 grams and 10 grams according to the consultation paper of SEBI to increase the interest of small investors and shopping. These electronic gold receipts can be easily bought and sold in the exchange, which will also help in the discovery of the right price of gold.

SEBI has also talked about some rules for vault managers. The vault manager will be registered as an intermediary with SEBI. That is, the role of these managers will be important in the coordination between Exchange and SEBI.

What are gold exchanges?

The Gold Exchange functions as a market in much the same way as the Common Stock Exchange. In this market, people can place orders for the purchase and sale of gold. After this, gold orders are delivered to the buyers. Just as it takes 2 days (T + 2) to get into a demat account after the purchase of shares in the stock market, in the same way it can take one or two days for gold to reach the buyer. However, investors can also decide not to take physical delivery and later sell at a profit.

There are many gold exchanges around the world where gold is traded in large quantities. Shanghai, Hong Kong, London, New York, etc. are the world’s most famous gold exchanges.

What will be the benefit of exchange?

Being a large gold consumer and importer country, gold exchange in India has particularly important advantages. At the spot gold exchange, buying and selling of gold keeps going on all the time, so that it is quite easy to find its true value in the market. So far, gold prices in India are decided by international markets especially London.

This process can not only ensure the purity of gold, but it will also be easy to estimate the correct value for different locations. Apart from all this, there will be an expansion in the formal gold market due to the gold exchange in India and there will be an increase in earnings from tax.

According to the NITI Aayog report, the gold monetization scheme of the government will also get strength due to the bullion exchange. Due to more transparency in gold prices, people’s interest can increase.

Gold exchange is also called spot gold exchange. It is expected that investors will also be able to trade in futures and options contracts on the Gold Exchange of India.