In a first, BSE to deliver India standard gold and silver in F&O segment

Move may see country emerge from price taker to price setter in bullion; all exchanges with F&O trading in bullion current offering LBMA -approved gold and silver for delivery

The BSE has introduced a first-of-its-kind India standard gold and silver delivery, under the ‘futures and options’ (F&O) bullion contracts. This move could potentially elevate India’s status as a ‘price-setter’ for the metals.

To facilitate the India standard delivery, the Bureau of Indian Standards (BIS) had, in January, notified standards for purity of gold and silver. All exchanges offering F&O contracts in bullion quote, at present, the London Bullion Markets Association (LBMA)-approved gold and silver for delivery. Only one Indian refinery qualifies for supplying LBMA gold; rest on bourses is imported.

Consequently, India stands as a ‘price taker’ in spite of being the largest consumer. The country’s annual consumption stands at 800-1,000 tonnes (gold), and 6,500-7,000 tonnes (silver).

“With this step, the BSE wishes to highlight its commitment and priority towards development of the Indian bullion market. By conforming to its own good delivery standard, India could emerge as a price-setter, instead of a price-taker in bullion trade,” said Sameer Patil, chief business officer of the BSE.

 

 

Few other organisations had earlier tried to launch India standard delivery for gold and silver. 

However, traders sensed a trust deficit. To bridge the gap, however, the BSE has sought an undertaking from a number or Indian refineries. “We can start delivery as soon as from the current contract expiry, with no premium or discount to LBMA-approved bullion,” said Patil.

In a similar development, the BSE is set to launch ‘almond’ futures on its platform later this month.