SEBI announced trading facilities related to Electronic Gold Receipts (EGRs), which are electronic receipts issued on the basis of physical gold deposits.
Gold Exchange, which is an ecosystem for trading of EGR and physical delivery of gold, will be a national platform for buying and selling of EGR issued against physical gold. SEBI will regulate the entire ecosystem of the proposed gold exchange.
SEBI Board in its meeting held on 28th September, 2021 approved the framework of Gold Exchange and SEBI (Vault Managers) Regulations, 2021. The EGR was subsequently notified as a ‘Security’ in December 2021 under the Securities Contracts (Regulation) Act 1956. Mode of operation of Gold Exchange in India. Subsequently, the Framework for Operation of Gold Exchange in India was also issued.
Now, to specify the details of various aspects of trading of EGR on recognized stock exchanges, guidelines covering trading timings, transaction fees by stock exchanges, block and bulk deals, price bands, Investor Protection Fund (IPF) and investors The Fund and Unique Customer Code was issued by the service regulator. Here are the key features
business or working hours
Trading will be allowed in EGR segment from Monday to Friday. As per the SEBI circular, stock exchanges may fix their trading hours within the time frame of 9:00 am to 11:30 pm / 11:55 pm.
On trading holidays, which will be jointly decided by all stock exchanges, exchanges may allow trading in the evening session – 5:00 pm, if internationally referenceable markets are open.
Duration
The pre-open session will be for a duration of 15 minutes – from 8:45 AM to 9:00 AM, out of which 8 minutes will be allowed for order entry, order modification and order cancellation, order matching and 4 minutes for trades. Confirmation and the remaining 3 minutes will be a buffer period to facilitate the transition from the pre-open session to the normal market. The session will be closed randomly during the last one minute of order entry i.e. anytime between 7th and 8th minutes of order entry.
price band
With a view to ensure orderly trading and protect market integrity, stock exchanges were asked by the regulator to introduce a mechanism of price bands in the EGR clause. This is to prevent acceptance of orders for execution which are placed beyond the price limits set by the stock exchanges.
The opening price range for the price band will be set at 10% of the previous closing price. In the event of a market trend in either direction, the dynamic price band may be relaxed by the stock exchanges in increments of 5%.
The stock exchanges will take into account the price movements in the international market while relaxing the price bands.
unique customer code
For transactions in EGR segment, it is mandatory for all customers to have Unique Customer Code (UCC). Stock exchanges will not allow execution of trades without uploading the UCC details. For this, the Permanent Account Number (PAN) issued by the Income Tax Department will be verified.
Guidelines for Vault Managers
In a separate circular, SEBI has also issued Standard Operating Guidelines for Vault Managers and Depositories related to the EGR segment. Vault managers are essential for the creation and termination of EGR. The modalities for deposit of gold, generation of EGR, withdrawal of gold and termination of EGR have been prescribed in the said circular.
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