BSE launches Electronic Gold Receipts: What it is and how investors can trade? Explained

Electronic Gold Receipts: BSE has launched Electronic Gold Receipt (EGR) on its platform, a move that will help in efficient and transparent price discovery of the yellow metal. The exchange has introduced two new products of 995 and 999 purity during the Muhurat trading on Diwali and trading will be in multiples of 1 gram and deliveries in multiples of 10 gram and 100 gram.

The announcement came after the exchange last month received final approval from the Securities and Exchange Board of India (Sebi) for introducing EGR on its platform.

How to trade?
Investors can now trade in gold similar to shares with the launch of Electronic Gold Receipts (EGR) by the BSE. BSE is the first exchange in India to launch EGR.

"The launch of EGRs represents a significant milestone not only for the BSE but also for the global bullion industry. BSE is committed to continuously facilitating access to high-quality investment-based products and services for our stakeholders," Sameer Patil, CBO at BSE said.

What is EGR? 
Sebi had earlier cleared a proposal for gold exchange, wherein the yellow metal will be traded in the form of EGRs and will help in having a transparent domestic spot price discovery mechanism. 

A platform for EGR infuses transparency in gold spot transactions, enables India to emerge as the price setter, and would eliminate existing market inefficiencies.

The EGR platform can ensure greater assurance in the quality of gold supplied, efficient price discovery, and transparency in transacting. 

Who can invest in EGR?
EGRs will cater to all market participants, which means that buyers and sellers on the exchange will include individual investors, as well as commercial participants along the value chain like importers, banks, refiners, bullion traders, jewellery manufacturers, and retailers.

How to invest in EGR?
Gold will first have to be converted into a Demat account similar to share trading and then with the receipt investors can trade in gold.  This Gold will be in vaults and vault manager will be provided by ERG.

How to get the delivery of Gold?
Gold can be delivered in 10 grams and 100 grams. 10-grams gold delivery can be in the form of a bar or coin and 100 grams of gold will be only delivered in a bar.

There are vaults in 22 locations in India and the gold will be delivered door to door from these vaults by agencies Brink’s India and Sequel Logistics. 

The announcement of the launch came after the exchange last month received final approval from the Securities and Exchange Board of India (Sebi) for introducing EGR on its platform.

BSE in February received in-principle approval from Sebi after which the exchange conducted several mock trading in the test environment for its members to facilitate trading in EGRs.

EGRs will cater to all market participants, which means that buyers and sellers on the exchange will include individual investors, as well as commercial participants along the value chain like importers, banks, refiners, bullion traders, jewellery manufacturers, and retailers.

(With PTI inputs)