BSE launches Electronic Gold Receipts for efficient price discovery of gold

Leading stock exchange BSE has launched Electronic Gold Receipt (EGR) on its platform, a move that will help in efficient and transparent price discovery of the yellow metal.

It introduced two new products of 995 and 999 purity during the Muhurat trading on Diwali and trading will be in multiples of 1 gram and deliveries in multiples of 10 gram and 100 gram, the exchange said in a statement.

The announcement came after the exchange last month received final approval from the Securities and Exchange Board of India (Sebi) for introducing EGR on its platform.

BSE in February received in-principle approval from Sebi after which the exchange conducted several mock trading in the test environment for its members to facilitate trading in EGRs.

EGRs will cater to all market participants, which means that buyers and sellers on the exchange will include individual investors, as well as commercial participants along the value chain like importers, banks, refiners, bullion traders, jewellery manufacturers, and retailers.

"The launch of EGRs represents a significant milestone not only for the BSE but also for the global bullion industry. BSE is committed to continuously facilitating access to high-quality investment-based products and services for our stakeholders," Sameer Patil, CBO at BSE said on Monday.

The EGR platform will lead to greater assurance in the quality of gold supplied, efficient price discovery, and transparency in transacting. This can create a vibrant gold ecosystem in India by enabling actual fungibility of gold.

India is the second largest consumer of gold globally with annual gold demand of approximately 800-900 tonne and holds an important position in the global markets.

The country has remained a price-taker in the global markets, and at present, does not play any significant role in influencing the price-setting for the commodity.

A platform for EGR infuses transparency in gold spot transactions, enables India to emerge as the price setter, and would eliminate existing market inefficiencies.