SEBI clears framework for setting up gold and social stock exchange

Mumbai, September 28

SEBI’s Board on Tuesday cleared a proposal for setting up a gold exchange wherein the yellow metal will be traded in the form of electronic gold receipts and the bourse will help in having a transparent domestic spot price discovery mechanism.

The instruments representing gold will be called Electronic Gold Receipts (EGRs) and will be notified as securities, SEBI Chairman Ajay Tyagi said at a press conference after the Board meeting. “EGRs will have the trading, clearing and settlement features akin to any other securities,” he said.

Any recognised stock exchange, existing as well as new, can launch trading in EGRs in a separate segment. The denomination for trading of EGR and conversion of EGR into gold can be decided by the stock exchanges with the approval of SEBI.

The gold exchange, encompassing the entire ecosystem of trading of EGR and physical delivery of gold, is expected to create a vibrant gold ecosystem in India, SEBI said.

According to the regulator, the exchange would be a national platform for buying and selling EGRs with underlying standardised gold in India and also create a national pricing structure for gold.

“The gold exchange is expected to offer a host of benefits for the value chain participants and for the entire gold market ecosystem such as efficient and transparent price discovery, investment liquidity, assurance in the quality of gold etc,” SEBI noted.

The clearing corporation will settle the trades executed on the stock exchanges by way of transferring EGRs and funds to the buyer and seller respectively.

The EGR holder can continue to hold the EGRs as long as intended since EGRs will have perpetual validity. — PTI

Clearing corporation to settle trades

• The instruments representing gold will be called Electronic Gold Receipts (EGRs) and will be notified as securities
• Any recognised stock exchange, existing as well as new, can launch trading in EGRs in a separate segment
• The clearing corporation will settle the trades executed on the stock exchanges by way of transferring EGRs and funds to the buyer and seller respectively

Regulations for social stock exchange

• SEBI on Tuesday also decided to set up Social Stock Exchange (SSE) for fund raising by social enterprises
• The framework for the SSE has been developed on the basis of the recommendations of a working group and technical group constituted by the regulator

Norms for superior voting rights eased

• SEBI also decided to relax the framework governing the issue of shares with superior voting rights (SR shares), a move that will help new-age technology companies
• Promoters who have a net worth of over Rs1,000 crore can have superior voting rights in their companies, raising it from the current Rs500 crore