BSE receives SEBI’s final approval to launch EGR on its platform: Leading stock exchange BSE reported that the capital markets regulator SEBI has given its final permission for the introduction of the Electronic Gold Receipt (EGR) on its platform. Following the Securities and Exchange Board of India’s in-principle clearance, the BSE conducted a number of mock trading sessions for its members in the test environment to enable trading in EGRs.
What is Electronic Gold Receipt (EGR)?
The Securities and Exchange Board of India (SEBI) suggested a regulatory framework for the establishment of a gold spot exchange, intending to leverage India’s disproportionate physical market dominance to allow gold to be traded in the financial market as well. Trading gold on the financial market would be regarded as yet another method of persuading people to quit hoarding gold and to establish an exchange with clear pricing and liquidity, in addition, to directly influencing the gold price (to cash or back to gold).
Benefits of EGR
- The EGR platform will increase transparency in transactions, efficiency in price discovery, and guarantee in the quality of delivered gold. This can enable the actual fungibility of gold, which is what is required right now, and so build a thriving gold ecosystem in India.
- EGRs will serve all market participants, therefore buyers and sellers on the exchange will include both private investors and business people who are involved in the value chain, such as importers, banks, refiners, bullion brokers, jewelry producers, and retailers.
- With an annual demand for gold of over 800-900 tonnes, India ranks as the second-largest gold consumer in the world and plays a significant role in international markets. The nation has continued to be a price-taker on the international markets and currently has no visible influence over how much a commodity’s price is set. A platform for EGR will reduce current market inefficiencies and inject transparency into gold spot transactions, allowing India to emerge as the price-setter.
Bombay Stock Exchange (BSE)
- BSE, originally known as Bombay Stock Exchange, was founded in 1875 and is Asia’s first and fastest stock exchange.
- India’s first international exchange, India INX, has been established by BSE and is situated in Ahmedabad’s Gift City IFSC.
- Premchand Roychand started the Bombay Stock Exchange.