Gold exchange blueprint tops Sebi's board meet agenda on February 17

The Securities and Exchange Board of India (Sebi) board is likely to discuss various Budget proposals related to the securities market, especially the road map of a bullion exchange, during its February 17 meeting, said a senior official said. Finance Minister Nirmala Sitharaman is set to address the market regulator's board as part of a customary practice after the presentation of the Union Budget. 

The Sebi board is set to discuss the structure and challenges while setting up a spot gold exchange as proposed in the Union Budget last week. It’s the first time the regulator will regulate a spot commodity market.

Sebi, it has been learnt, was initially not in the favour of regulating spot commodities given the different dynamics.

In 2018, Sebi had proposed a separate regulator for the same. However, the same year, a committee set up by the finance ministry suggested Sebi be made the regulator for bullion exchanges.

Interestingly, the regulator for the International Financial Service Centre (IFSC) at GIFT City is not in favour of a multiple bullion exchange. The IFSC is establishing a bullion exchange to tap international investors. But Sebi-regulated exchanges (National Stock Exchange, BSE) are willing to set up more than one exchange. 

Sources said the regulation for IFSC gold spot exchange will be separate from the one for the Sebi-regulated exchange. But whether both regulators will collaborate to draft the two separate legislation is not yet clear. 

The Union minister on February 1 had said that Sebi would be the designated regulator for gold exchanges, ensuring transparency in gold transactions. The announcement was in line with the expert committee report, under the leadership of a NITI Aayog member, who had pointed out the importance of regulation in the spot market after the 2013 National Spot Exchange scam worth Rs 5,600 crore.

Among the other Budget proposals is the Sebi board forming an expert committee for the Securities Market Code. The single code for the bond markets is expected to address overlapping which the four securities regulations have. 

Besides, the layout of the investor charter and the status on foreign direct listing will be also taken up by the board next week, said people in the know. 

The government in the Budget has proposed a unique investor charter which will have all the information about each of the products which investors are putting money into. 

“Be its mutual funds, insurance, or any products… Each regulator will have this investor charter, including Sebi, IRDA, PFRDA, etc. The aim is to bring more transparency and curb mis-selling of the products. It will feature — commissions, price, terms, conditions etc. We are planning to make it one-page information, which will help each investor make an informed decision bef­ore investing money in any of the products,” Economic Affairs Secr­etary Tarun Bajaj, who is on the Sebi board, told Business Standard in a post-Budget interaction.