BSE, NSE, MCX gear up for India's first bullion exchange at Gift City

The remaining share capital may be acquired or held by any other person with a maximum cap of 5 per cent per investor.

Gift City International Financial Services Centre (IFSC) is set to get India’s first spot bullion exchange and this may happen in the next six months. The government has notified regulations for setting up the bullion exchange in Gift City IFSC. They were made public on Friday. 

All the three major Indian bourses like BSE, National Stock Exchange (NSE) and Multi-Commodity Exchange (MCX) plan to compete at Gift City’s special economic zone (SEZ) by setting up their own bullion exchanges after getting formal approval from regulator International Fina­ncial Services Centre Authority (IFSCA).

The gazette notification, permitting the setting up of a bullion exchange at IFSC, with a net worth of $30 million, allows the promoter group to hold a maximum 51 per cent equity. This includes equity held by consortium members of the promoter group (domestic or foreign exchange), if any.

The remaining share capital may be acquired or held by any other person (whether Indian or of foreign jurisdiction) with a maximum cap of 5 per cent per investor. 

Balasubramaniam V, chief executive officer (CEO), India International Exchange (IFSC), said, “India INX, as part of the BSE group, has already expressed interest to IFSCA for setting up a international bullion exchange. We are working towards building a broad-based consortium to establish the proposed exchange and have already got a few expressions of interest from various entities across the value chain of the bullion industry, including market infrastructure institutions from India.

NSE’s subsidiary NSE International Exchange is also aggressive with a plan to formally seek permission for its exchange. According to a source, NSE has been talking to several players, Indian as well as foreign entities, for developing its exchange eco system and also for partnering them. Eventually, NSE plans to grow on the China model with a dedicated spot exchange for international business (IFSC), which will be at Gift City IFSC and domestic spot exchange, whenever permitted. Both would complement each other and set standards for India’s bullion business.

An NSE spokesperson said, “We will develop the bullion exchange with the best-in-class international infrastructure, making IFSC the destination for India’s bullion business.” 

According to sources, MCX, the leading exchange for bullion derivatives in India’s commodity market, is also considering setting up a bullion exchange. Sources said it will approach its board with a plan. An MCX spokesperson declined to comment. Even market infrastructure companies are actively looking at the bullion exchange. One of India’s leading vaulting companies has already set up a facility and will start operations soon. Sequel Logistics’ chairman and managing director Sharad Jobanputra said, “We are ready with the infrastructure and an arrangement to deal internationally as well as locally for handling the bullion exchange business.” 

All exchanges are said to be talking to Sequel for providing vaulting facilities.

Sequels Logistics is also ready to handle gold imported at IFSC by banks for the domestic market. According to Jobanputra, this is a good opportunity and cost effective for businesses in India also.