Gold EGR framework may need a review to revive India’s price-setter ambition: Sebi Chairman

The Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Saturday said that the framework for Electronic Gold Receipts (EGRs) may need a review while acknowledging that the EGR framework has not gained the desired traction so far. He also urged the industry to educate investors to deal only in regulated gold products.

He said EGRs were introduced to create a regulated market for gold trading and position India as a global price discovery centre for the precious metal.

“EGRs were meant to create a regulated market for trading gold and establish India as a global price-setter for gold. While the EGR framework may need a review, I urge the industry to educate its participants and investors to deal only in regulated gold products,” Pandey said while speaking at an event organised by Commodity & Capital Participants Association of India (CPAI).

“I think there are GST challenges around it,” a PTI report said quoting Pandey.

Pandey said the regulator is analysing structural, operational, and regulatory challenges that have limited the adoption of EGRs, moneycontrol reported.

Investors can buy regulated gold products in the form of commodity derivatives, Gold ETFs and EGRs.The Sebi chief highlighted that these regulated products ensure investor protection.The market regulator recently warned investors against digital or online platforms offering gold products, as these possess significant risks for investors and may expose them to counterparty or operational risks.

“It has come to the notice of Sebi that some digital/online platforms are offering investors to invest in ‘Digital Gold/E-Gold Products’. Digital Gold is being marketed as an alternative for investment in physical gold. In this context, it is informed that such digital gold products are different from Sebi-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of Sebi,” a media release issued last month said.

Also Read: Sebi warns investors against unregulated platforms offering digital gold productsPandey also mentioned the downside pressures faced by the commodity markets amid growing upside risks like geopolitics, sanctions, weather shocks and data-centre demand.

“Robust commodity derivatives markets are needed to convert this price volatility into a manageable risk. Markets establish fair values that reflect future expectations. This transparent pricing is the highest form of market integrity,” he added.

Sebi has undertaken a clutch of regulatory reforms for ease of doing business, including shortening the staggered delivery period from a minimum of five working days to three working days.

Also Read: Sebi approves new stock brokers’ regulations to simplify compliance framework. 10 key takeawaysThe recently approved new Stock Broker regulations will enhance ease of compliance by ensuring simplified language and overall structured provisions, Pandey said.

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