IFSCA does pilot run of international bullion exchange ahead of Oct launch

IFSCA has envisioned the International Bullion Exchange as a 'Gateway for Bullion Imports into India', wherein all the such imports for domestic use will be routed via the exchange

The International Financial Services Centres Authority (IFSCA) chairperson on Wednesday did the pilot run of the International Bullion Exchange.

Scheduled to go live on October 1, 2021 on the Foundation Day of IFSCA, the exchange falls under the International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020 which was notified on December 11, 2020 following the announcement by the finance minister in Union Budget 2020-21.

Apart from the international bullion exchange, the new regulations cover the clearing corporation, depository and vaults even as the Centre Government has taken steps to notify bullion spot trading and bullion depository receipts with underlying bullion as financial products and bullion related services as financial services.

The IFSCA has envisioned the International Bullion Exchange as a 'Gateway for Bullion Imports into India', wherein all the bullion imports for domestic consumption shall be channelised through the exchange.

According to the authority, the exchange ecosystem is expected to bring all the market participants at a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the World.

Moreover, a holding company India International Bullion Holding IFSC Ltd. (IIBH) has been created for setting up and operationalising International Bullion Exchange, Bullion Clearing Corporation and Bullion Depository in IFSC, GIFT City.

IIBH was formed following a memorandum of understanding (MoU) between National Stock Exchange of India Limited (NSE), the Multi Commodity Exchange of India Limited (MCX), India INX International Exchange (IFSC) Limited (INDIA INX), National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Further, the IFSCA has approved IIBH's application for setting up the international bullion exchange through the latter's subsidiary India International Bullion Exchange IFSC Ltd., encompassing the bullion exchange and the bullion clearing corporation.

Meanwhile, CDSL-IFSC, a foreign depository, has been designated as the bullion depository for the bullion exchange responsible for managing the vault manager.