New exit route on e-series bullion

Currently unit holders intending to take physical delivery have to transfer units to designated beneficiary account (house account) of exchange

National Spot Exchange Ltd (NSEL) has offered a fast exit route for e-series unit holders of gold and silver. After feedback received from all market participants and after discussion with prospective buyers, the exchange has made an arrangement for all e-series holders of gold and silver units by way of financial settlement (encashment of e-series units), an NSEL circular said.

Under the existing arrangement of conversion of e-series gold and silver units, the unit holders intending to take physical delivery have to transfer these to the designated beneficiary account (house account) of the exchange. Holders opting for physical delivery are required to redeem their holdings by giving a surrender request form (SRF). Due to heavy redemption pressure, this process is taking substantial time. All pending SRFs (including inter depository participants swap requests) shall be cancelled and the units returned to the designated  account of the respective beneficiaries. The existing procedure of physical conversion through SRF shall be discontinued for the time being.

In the new mechanism, those intending to redeem their holdings shall transfer their units to their member’s pool account. Such a transfer shall be considered as consent to accept the arrangement of redemption of e-series units (gold or silver). An auto delivery order  facility shall not be available for the said settlements.

Members shall be required to ensure the necessary instructions to their depository participants.

The exchange will intimate market type and settlement number details for this arrangement in due course, the circular said. The unit holders can redeem their units by the above method between October 3 and 9 or extinction of units, whichever is earlier.

The redemption price for the financial settlement shall be arrived at each day, based on the standard acceptable market practice under which the landing cost of gold and silver in India shall be arrived at, based on the London AM spot fixing price, the exchange clarified.

Those willing to buy the units (which shall be in multiples of 1 kg and 100g to the extent possible for gold and 30 kg for silver) shall fax their intention to take delivery every day. Intentions so received shall be accepted on a first come, first served basis. Th exchange shall provide quantity confirmation to the buyer/s, based on the units received by the exchange from the unit holders.

On confirmation by the exchange with regard to availability of sufficient requests in the pool account and based on the allocation intimation, buyers shall be required to deposit funds in the designated exchange account.