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Proposed gold exchange to have its own good delivery norms

Good delivery draft based on global norms, Indian elements to deal with finance and production numbe

Rajesh Bhayani  |  Mumbai 

Gold

In a move that will set the stage for setting up a spot exchange for trading, help make trade transparent and eveolve an  India-based price, the government is considering formulating and responsible practices for trading in the precious metal.

So far, in most trading centres across the globe, or LBMA delivery standards are accepted. Even on Indian futures exchanges, it is the LBMA standard that is regarded as good delivery to the extent that refined by Indian refinery, but not having LBMA recognition, is not acceptable on

In India, only refinery has been recognised by LBMA. The government is discussing this issue with stakeholders in the bullion industry, including Indian Bullion Jewellers Association (IBJA), World Council (WGC), Ficci, hallmarking and refinery associations and Indian Policy Centre under among others. As per the discussions held so far, a rough road map has been proposed for spot exchange, which will be refined further.

Rajesh Khosla, said, "The good delivery draft has been modelled on international norms for precision and quality set by LBMA, on which there can be no compromise. The Indian elements in this draft deal with finance and production numbers that relate to the Indian environment. The quality standards proposed are global and there is no compromise on that."

WGC is also preparing feasibility report for spot exchange for gold, which is likely to be out in a month or two. Under the draft norms, refineries will come under the ambit of the Indian proposed by IBJA, if they have four years of experience in refining metals, an annual refined production of 5 tonnes, and a tangible net worth of Rs 15 crore.

has also proposed specifications for good delivery bars, integrated responsible guidance proficiency testing and proactive monitoring and auditing procedures. Responsible norms include procedures to be followed for ensuring is not imported from conflict zones or areas where mining is either illegal or the revenue from mined is used for illegal or anti-social activities.

Said Surendra Mehta, secretary IBJA, which prepared good delivery norms for along with all stakeholders: "Indian good delivery rules and responsible standards are key to the establishment of a spot exchange." put the draft on its website and has invited suggestions from stakeholders on the draft rules till August 14. Mehta added, "The rules for good delivery and responsible standards will also apply to silver." Comments on this draft have also been invited from government, BIS, RBI and Sebi among others.

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However, according to sources in the know, work for setting up a exchange is being executed on several front. Apart from IBJA's proposed India good delivery norms and WGC feasibility report, a proposal is under discussion in the finance ministry on GST treatment.

According to the proposal relating to GST on traded on the proposed spot exchange, trading will not attract GST, only deliveries will. Vaults storing will be recognised by the exchange and delivery centres covering major trading and processing areas will also be identified. Deliveries will have swap options to facilitate intercity trade. So, if a trader in Chennai sells to a trader in Mumbai, then the seller's account in Chennai will be debited, while delivery will be made from the vault situated in Mumbai.

Trading will be on a nationwide online platform. BSE and commodity exchanges are already deliberating this issue. BSE has also proposed to set up a spot exchange in partnership with

Discussions held so far on the spot exchange have also included issues such as who should regulate the bourse, whether or not all imports should be compulsorily sold on the spot exchange. Some clarity will emerge after WGC comes out with its feasibility study.

First Published: Thu, July 20 2017. 01:21 IST
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