Master Circular for Electronic Gold Receipts (EGRs)
Summary
This section establishes the regulatory framework for Electronic Gold Receipts (EGRs) as securities under Indian law and outlines the three-stage transaction lifecycle. It defines the roles of stock exchanges, depositories, and vault managers in creating, trading, and converting EGRs into physical gold. The text mandates specific standards for gold quality and requires continuous reconciliation between digital records and physical holdings. This section defines fungibility and inter-operability for Exchange Gold Receipts (EGRs) while establishing rules for withdrawal centers, storage charges, and assaying services. It outlines trading hours, holiday schedules, and transaction charge frameworks for the EGR segment on stock exchanges. Additionally, it details the procedural mechanics for the pre-open call auction session, including price discovery, order types, and execution priorities. This section outlines operational rules for pending orders, risk management, and information dissemination during the pre-open session of the EGR segment. It establishes a specific framework for block deals, including duration, reference pricing, price limits, minimum order sizes, and disclosure requi
Text
Government of India vide Gazette notification S.O. 5401 (E) dated December 24, 2021, has declared “electronic gold receipts” as ‘securities’ under Section 2(h)(iia) of the Securities Contracts (Regulation) Act 1956 (“SCRA”), and vide Gazette notification dated December 31, 2021, the VM Regulations have been notified, paving the way for operationalizing of Gold Exchange or EGR segment.
The stock exchange/s desirous of trading in electronic gold receipts (EGRs) may apply to SEBI for approval of trading of EGRs in new segment.
New and existing recognized stock exchanges may launch and deal in EGRs, in a new segment.
The entire transaction has been divided into following three tranches: First Tranche: Creation of EGR; Second Tranche: Trading of EGR on stock exchange/s; Third Tranche: Conversion of EGR into Physical Gold.
A common interface shall be developed by Depositories, which shall be made accessible to all the entities i.e., Vault Managers, Depositories, Stock Exchanges and Clearing Corporations.
The supply of the physical gold, to be converted into EGR, shall be the fresh deposit of gold, coming into the vaults, either through imports or through stock exchange/s accredited domestic refineries. The existing deposit of gold lying in the vaults, which meets the aforesaid criteria and has never been out of the vaulting infrastructure, can be considered for conversion into EGR.
The ‘gold’ which complies either with LBMA Good Delivery Standard or with the India Good Delivery Standard, or any other standard specified by SEBI, shall be eligible under this framework.
The Vault Manager on receipt of physical gold shall record the relevant information in the common interface and create the EGR. The EGR shall be created at the behest of the depositor (or owner of the gold) intending to convert physical gold into EGR.
The Vault Manager shall ensure that no EGR is created without the presence of corresponding physical gold in its vaults.
The EGR shall reflect in the demat account of the beneficial owner maintained with the Depository Participant.
The Depositories shall take necessary action to make EGR/s tradeable on the stock exchange/s.
The Vault Manager and the Depositories shall regularly reconcile the data of EGR’s created and the corresponding physical gold lying in the vaults. Additionally, the Depositories shall inspect the physical gold deposited in the vault/s at periodic intervals.
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Source: SecMarx — Master Circular for Electronic Gold Receipts (EGRs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.