Standard Operating Guidelines for the Vault Managers and Depositories - Electronic Gold Receipts (EGR) segment
Summary
This circular establishes Standard Operating Guidelines for Vault Managers and Depositories in the Electronic Gold Receipts segment under SEBI regulations. It mandates specific financial security deposits, corporate governance structures, and infrastructure standards for vault operations. Additionally, it requires comprehensive insurance coverage for gold stored in recognized vaults to protect investor interests. This section mandates specific insurance coverage for vault managers, including fidelity and terrorism risks, with values marked to market. It establishes daily reconciliation procedures between depositories and vaults, imposing restrictions on transactions during discrepancies. Furthermore, it outlines charge collection mechanisms, safety protocols for fire and theft, and indemnification obligations for lost or damaged gold. This section mandates the maintenance of specific records by Vault Managers for five years and outlines inspection protocols conducted by Depositories. It establishes a grievance redressal mechanism with distinct timelines for resolving quantity, quality, and operational complaints. Finally, it requires public disclosures from both Vault Managers and
Text
The Vault Manager shall furnish FSD of Rs. 10 lakhs to any one of the two Depositories before obtaining a certificate of registration from SEBI. This is the minimum amount of FSD which has to be maintained with Depository at all points of time.
The FSD shall be either in the form of cash, bank fixed deposits or bank guarantees or any combination thereof, without applying any haircut.
The Depository shall put in place a procedure to utilize the FSD for compensating the aggrieved client, in the following situations: for any such losses caused to a client that have been appropriately established by the Depository against the Vault Manager; in case of loss arising from any action or inaction of the Vault Manager that prevents the client from exercising, in whole or in part, their rights while availing vaulting services.
In case of utilization of FSD by the Depository, in part or full, the Vault Manager shall replenish the FSD within seven working days.
The settlement of claims shall be done by the Depositories on a pro-rata basis.
Any discrepancy noted/ claim received from a client by any of the Depositories shall be brought to the notice of other Depository as and when such claim is received or discrepancy is noted or also through a mutually agreed report format mentioning therein the details of discrepancies/claims received, on a quarterly basis, irrespective of invocation of the FSD during the said quarter.
Upon surrender of registration by the Vault Manager to SEBI, the FSD can be released after six months from the date of cancellation of registration or upon settlement of all claims, to the satisfaction of the Depository, whichever is later.
The Vault Manager shall designate one of its employees as a Compliance Officer who would be responsible for monitoring the compliance with relevant Acts, rules and regulations, notifications, guidelines and circulars issued by relevant authorities from time to time.
The recognized vaults shall be under the absolute control of the Vault Manager. In case of a leased property, the Vault Manager shall hold a direct lease for at least three years and it shall be ensured that no third party including the owner/lessor of the recognized vault has any role to play in the operations of the said recognized vault.
The gold deposited for creation of EGRs shall be stored in separate racks providing clear-cut demarcation of EGR business from its other businesses.
The Vault Manager shall ensure that the recognized vaults are physically and operationally suitable for proper storage of gold and have the following minimum safety and security features: CCTV monitors, IR Cameras, Sensors, Panic Switches, Recoding systems, Interlocking doors, etc.
The Vault Manager shall have systems for real time tracking of gold, underlying EGR, starting from the time of deposits till the time of withdrawal of the underlying gold from the recognized vault.
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Source: SecMarx — Standard Operating Guidelines for the Vault Managers and Depositories - Electronic Gold Receipts (EGR) segment. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.