Product specifications pertaining to the Electronic Gold Receipts (EGR) segment in India
Summary
This circular specifies product specifications for Electronic Gold Receipts (EGR) in India, building upon previous frameworks for the Gold Exchange. It mandates that stock exchanges define specific deposit, trading, settlement, and withdrawal units for EGR transactions. The document outlines obligations for exchanges to amend bye-laws, disseminate information, and report implementation status to SEBI.
Text
The entire transaction in EGR segment has been divided into three tranches: tranche 1 involves converting physical gold into EGR; tranche 2 involves trading EGR on stock exchanges; and tranche 3 allows conversion of EGR back into physical gold.
Stock exchanges may launch products or contracts subject to complying with the following guidelines regarding units, ISIN norms, and investor information.
Any person desirous of dealing in EGR on the stock exchange shall deposit the gold with the registered Vault Managers, in the ‘deposit unit’, which shall be specified by the stock exchanges.
The trading of EGR shall take place on stock exchanges, in the ‘trading unit’, which shall be specified by the stock exchanges. The stock exchanges shall ensure that trading unit is not smaller than 10th part of the corresponding deposit unit.
The ‘settlement unit’ of EGR shall be same as ‘trading unit’, which shall be specified by the stock exchanges.
Beneficial owner of EGR intending to obtain physical gold against the EGR/s, shall follow the procedure as stated in SEBI Circular dated January 10, 2022. The ‘withdrawal unit’ of EGR shall be same as ‘deposit unit’, which shall be specified by the stock exchanges.
In addition to ISIN norms specified in Annexure 2 of SEBI Circular no. SEBI/HO/CDMRD/DMP/P/CIR/2022/19 dated February 14, 2022, the ISINs of EGRs shall also contain details of deposit unit and trading unit, for the purpose of easy identification by the investors.
The stock exchanges shall disseminate adequate information to investors, especially for EGRs with different deposit and trading unit.
The details of deposit unit / withdrawal unit and trading unit / delivery unit shall be clearly spelt out in the contract specifications of the exchange.
At the time of creation of EGR, the beneficial owner of gold shall specify the trading unit of EGR, to the Vault Manager.
This Circular shall come into force with immediate effect.
Exchanges shall take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the same.
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Source: SecMarx — Product specifications pertaining to the Electronic Gold Receipts (EGR) segment in India. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.