On August 18, 2021, Injeti Srinivas, the Chairperson of International Financial Services Centres Authority (IFSCA), launched the pilot run/soft of ‘International Bullion Exchange’. The exchange was planned to go live on the Foundation Day of IFSCA i.e. on October 1, 2021.
- Bullion Exchange: It is a market for the buyers and sellers to trade gold and silver.
- The bullion exchange will provide an integrated common transparent platform (bullion market) for all participants to trade bullion.
What is Bullion?
Bullion refers to the pure form of physical gold and silver which is often kept in the form of bars, coins, etc.
Background:
i.In the Budget 2020-21, the Financial Minister Nirmala Sitharaman announced the setting up of an ‘International Bullion Exchange’ at the IFSC in GIFT City (Gujarat International Finance Tec-City), Gandhinagar, Gujarat.
ii.Subsequent to that, in December 2020, the government notified the bullion spot delivery contract and bullion depository receipt as Financial Products and bullion-related services as financial services, under the IFSCA Act, 2019.
iii.IFSCA has approved the IFSCA (Bullion Exchange) Regulations 2020, which will deal with the Bullion Exchange, Clearing Corporation (CC), Depository and Vaults, and other related provisions.
Key Points:
a.Gateway: The International Bullion Exchange will act as a ‘Gateway for Bullion Imports into India’. All the bullion imports for domestic consumption will be channelised through the exchange.
b.Holding Company and Subsidiaries:
i.A holding company named ‘India International Bullion Holding IFSC Ltd.’ (IIBH) was formed to set up and operationalise the International Bullion Exchange in IFSC, GIFT City.
ii.IIBH was formed through a Memorandum of Understanding (MoU) between the National Stock Exchange of India Limited (NSE), the Multi Commodity Exchange of India Limited (MCX), India INX International Exchange (INDIA INX) (IFSC) Limited, National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
iii.IFSCA has approved the application of IIBH to set up the International Bullion Exchange (including bullion exchange and the bullion CC) through its subsidiary ‘India International Bullion Exchange IFSC Ltd’.
iv.CDSL-IFSC, a foreign depository, was appointed as the Bullion Depository for the Exchange to manage the Vault Manager.
c.International Bullion Exchange will provide effective price discovery, assurance in the quality of gold, and create integration with other segments of financial markets.
Note – The London Bullion Market is the primary bullion market for global trading.
Recent Related News:
On May 17, 2021, the Securities and Exchange Board of India(SEBI) issued a Consultation Paper detailing the Proposed framework for the Gold Exchange in India and the draft SEBI (Vault Managers) Regulations, 2021 for regulating the gold exchange-related business of the Vault Managers.
About International Financial Services Centres Authority (IFSCA):
Establishment – April 27, 2020, under IFSCA Act, 2019
Headquarters – GIFT City, Gandhinagar, Gujarat
Chairperson – Injeti Srinivas
