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IFSCA approves Bullion Exchange Regulations, 2020 & Global In-House Centres Regulations, 2020

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IFSCA-approves-two-new-regulationsOn October 27, 2020, the International Financial Services Centres Authority (IFSCA) approved the International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020 and International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020 during a meeting chaired by Injeti Srinivas, Chairman of IFSCA. The regulations are detailed as below:

International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020

The Bullion Exchange Regulations, 2020 are approved to provide an integrated platform for all the market intermediaries to facilitate transparency in the bullion market and standardization of bullion contracts. The market intermediaries include trading members/clearing members, bullion depositories, and vault managers.

  • Through these regulations, an entire ecosystem for bullion trading viz. bullion exchange, depository, clearing house, and vaults Gujarat International Finance Tec-City (GIFT) will be set up. Notably, GIFT is India’s sole international financial services centre (IFSC).

 Points to be noted:

–This is the first time in India a single regulator (IFSCA), which has the responsibility of operationalizing the bullion exchange, will regulate both the bullion spot and derivative contracts.

–Bullion Exchange is a market through which the buyers and sellers trade gold and silver.

–On August 31, 2020, the central government, on the recommendations of the IFSCA, had notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the IFSCA Act, 2019.

Salient Features of Bullion Exchange Regulations:

  • Functions and general obligations of a bullion exchange and clearing corporation;
  • Ownership and governance structure of a bullion exchange and clearing corporation;
  • Rights and Obligations of Bullion Depositories, Participants and Beneficial Owners;
  • The grant of registration to a vault manager by the Authority
  • Role of bullion depositories
  • Other operational aspects of the bullion exchange

International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020

On October 16, 2020, Government of India, on the recommendation of IFSCA, had notified Global In-House Centres (GIC) as financial service to provide services relating to financial products and financial services. In this regard, on October 27, 2020, IFSCA approved International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020 with following key points:

  • A GIC can conduct its business in any mode as permitted by authority.
  • The entities must be located in a financial action task force (FATF) complaint jurisdiction to get services.
  • The GIC setup within the IFSC is eligible for availing all concessions applicable to IFSC units.

GICs are offshore centers that perform designated functions for large organizations.

Recent Related News:

i.On September 22, 2020 Singapore Exchange Ltd (in short- SGX) and National Stock Exchange of India Ltd.( NSE) signed an agreement to confirm the key terms to operationalise the NSE IFSC-SGX Connect. NSE IFSC-SGX Connect unites international and GIFT participants to create a large liquidity pool for Nifty products in GIFT City.

ii.On September 12, 2020 IFSCA and India Gold Policy Center (IGPC) at Indian Institute of Management – Ahmedabad (IIMA) (IFSCA-IIMA), sponsored by World Gold Council, signed Memorandum of Understanding (MoU) at the IFSCA, GIFT City Gandhinagar to provide consultation to facilitate the establishment of International Bullion Exchange(IBE) in India.

About International Financial Services Centre Authority (IFSCA):

On April 28, 2020, the Union government notified the setting up of the IFSCA as a unified authority to regulate all financial services in IFSCs across the country.

  • Injeti Srinivas was appointed as the first chairman of IFSCA.
  • Headquarter– Gandhinagar, Gujarat