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India’s first global gold exchange will allow jewellers to import gold directly

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Prime Minister Narendra Modi established country’s first bullion exchange, India International Bullion Exchange(IIBX). The India International Bullion Exchange is the world’s third exchange of its kind. The exchange will be run by India International Bullion Holding IFSC Limited and will be located at Gujarat International Finance Tec-City (GIFTTEC) (IIBH).

 

IIBX with its technology-driven solutions, will facilitate transition of Indian bullion market towards a more organised structure by granting qualified jewellers a direct access to import gold directly through the exchange mechanism,” the exchange said in an official statement.

In India, the MCX and the NCDEX currently offer gold futures contracts, but there was no physical exchange to buy gold until now. The exchange’s main goal is to make the process of procuring gold for jewellers more direct, with better price discovery. According to a Niti Aayog report, In 2021, India is heavily reliant on gold imports, which account for approximately 89% of India’s gold supply. Previously, jewellers had to rely on banks and government agencies to import gold, but now qualified jewellers can make an offer directly for gold. The exchange ecosystem is expected to bring all market participants to a common transparent bullion trading platform. The exchange would issue a Bullion Depository Receipt in exchange for the gold deposited by the supplier in the exchange’s vaults, and these BDRs would then be traded on the exchange. A jeweller can look at the available gold stock and bid at a price that they are comfortable with. According to IIBX’s CEO Ashok Gautam, once a jeweller purchases a BDR, it is deposited in their Demat account within 30 minutes because the exchange currently offers T+0 contracts.

 

Over the next few years, IIBX intends to launch gold metal loans for qualified jewellers, gold lease products for jewellers in SEZ areas, repo products backed by BDRs, NRI bullion investment products, and gold and silver dollar-denominated ETFs. Clearly, IIBX aspires to be a market infrastructure institution that provides a diverse range of products to anyone interested in bullion. However, for the time being, the foundation of IIBX’s business is to enable jewellers to import bullion directly at a lower cost, with increased efficiency in price discovery. If properly implemented, India could become an international centre for bullion trading, capturing significant market volumes. It has the potential to create jobs outside of the financial services sector, with Indian refiners selling refined products on the exchange.

How-long

 

Prime Minister Narendra Modi launched India’s first bullion exchange, the India International Bullion Exchange (IIBX). The India International Bullion Exchange is the third exchange of its kind in the globe.The exchange is located at Gujarat International Finance Tec-City (GIFTTEC) and will be run by India International Bullion Holding IFSC Limited (IIBH).

 

IIBX with its technology-driven solutions, will facilitate transition of Indian bullion market towards a more organised structure by granting qualified jewellers a direct access to import gold directly through the exchange mechanism,” the exchange said in an official statement.Currently, the Multi Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX) offer gold futures contracts in India, but till now, there was no physical exchange to buy gold

 

The main focus of the exchange is to make the process of procuring gold for jewellers directly, with better price discovery. India is heavily dependent on gold imports, accounting for around 89 per cent of India’s gold supply according to a Niti Aayog report, In 2021. Previously, the jewellers depended on banks and agencies to import gold, but now qualified jewellers can bid directly to procure gold. The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading.

 

The exchange would issue a Bullion Depository Receipt against the gold deposited in the vaults of the exchange by the supplier, and these BDRs would then be traded on the exchange. A jeweller can view the stock of gold available and bid accordingly, at the price they are comfortable with. Once a jeweller buys a BDR, it is deposited in their Demat account within 30 minutes, according to IIBX’s CEO Ashok Gautam, since the exchange currently offers T+0 contracts.

 

 

 

IIBX also plans to launch gold metal loans for qualified jewellers, gold lease products for jewellers in SEZ areas, repo products backed by BDRs, NRI bullion investment products, and gold and silver dollar-denominated ETFs over the next few years. Clearly, IIBX aims to become a market infrastructure institution that offers diverse products for everyone interested in bullion. But for now, the bedrock of IIBX’s business is to allow jewellers to import bullion directly at a lower cost, with increased efficiency in price discovery.

If executed well, India could become an international centre for bullion trading and capture significant volumes of the market. It could potentially even generate employment beyond the financial services sector, with Indian refiners selling refined products on the exchange

During the event, Prime Minister Modi said that India’s identity should not be limited to just a big bullion market but should be recognised as a ‘market maker’. Currently, gold in India is imported on a consignment model into different cities by nominated banks and agencies approved by the RBI and then supplied to traders/jewellers.  With the IIBX becoming operational today, qualified domestic buyers can, through a branch in Gift City, purchase the bars and coins.

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