All you need to know about India’s first international gold exchange – Times of India

NEW DELHI: Prime Minister Narendra Modi will launch India’s first International Bullion Exchange (IIBX) at the Gujarat International Finance Tec-City (GIFT City) near Gandhinagar on Friday. The exchange will sell physical gold and silver and aims to be set up on the lines of the Shanghai Gold Exchange and Borsa Istanbul in order to make India a key regional hub for bullion flows.
Point to note: The exchange is finally being launched after a year of delays, trials and dry runs.
What is bullion?
Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins. Bullion can sometimes be considered legal tender and is often held as reserves by central banks or held by institutional investors.
What is the purpose of the exchange?
The exchange is significant because for the first time in India, since the liberalisation of gold imports through nominated banks and agencies in the 1990s, the eligible qualified jewellers in India have been allowed to directly import gold through IIBX. For this, jewellers will have to become a trading partner or a client of an existing trading member. In addition, the exchange has set up necessary infrastructure to store physical gold and silver.
“The thought process behind setting this up to enable trading of commodities on an exchange. Since this is an international exchange, trading can take place in US dollars as well. We position ourselves as one of the biggest trading hubs in Asia. Because of the competitive pricing on IIBX, international players will be happy to use our vaulting services. Moreover, with this being a free trade zone, no duty will be paid,” Ashok Gautam, CEO and MD of IIBX had told Times of India earlier this month.
What was the practice up until now
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. The banks and other agencies get a fee from the gold exporter for handling, storage, etc, and also add a premium to the gold while transacting with domestic buyers.
The buyer passes this charge on to the value chain until it reaches the end customer. With the IIBX becoming operational today, qualified domestic buyers can, through a branch in Gift City, purchase the bars and coins from an international supplier therein who is a member of the IIBX along with them.
What is the advatange of an exchange?
“Through the disintermediation by facilitating transaction through an anonymously traded exchange platform, bullion is made available across special economic zones (SEZs) at International Financial Services Centres Authority (IFSCA)-approved vaults. This means the growth of IIBX is not just limited to GIFT City but across jewellery manufacturing hubs nationwide.
The qualified jeweller allowed to import gold through IIBX, or a jeweller who is a client of an IIBX member, can view the available stock and place the order. This shall nudge jewellers towards just-in-time inventory management. It will also result in greater transparency in pricing, and order sequencing, thereby removing any room for unfair preference by supplier, importing or logistics agency,” said Arvind Sahay, chairperson, India Gold Policy Centre, Indian Institute of Management Ahmedabad, in a column in Economic Times.
Which jewellers have come on board?
So far, 64 big jewelers have come onboard and more applications are in the pipelines. Some of the big names include Malabar Gold Pvt Ltd, Titan Company Ltd, Bangalore Refinery Pvt Ltd, RBZ Jewellers Pvt Ltd, Zaveri and Company Pvt Ltd.
What are the new RBI guidelines for importing gold?
Banks may now allow qualified Jewellers to remit advance payments for 11 days for import of gold through IIBX in compliance to the extant Foreign Trade Policy and regulations issued under IFSC Act. According to the RBI, all payments by qualified jewellers for imports of gold through IIBX, shall be made through exchange mechanism as approved by IFSCA.
“The International Bullion Exchange shall be the “Gateway for Bullion Imports into India”, wherein all the bullion imports for domestic consumption shall be channelized through the exchange. The exchange ecosystem is expected to bring all the market participants at a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the World,” read a statement by the government.
This exchange will facilitate efficient price dscovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialisation of gold in India, said statement by the IFSC Authority.
Who can enroll on the exchange?
Non-Resident Individual / Proprietorship Firm
Registered Partnership Firm
Private Limited Company
Public Limited Company
Qualified Jewellers
Branches of IBU at GIFT City
Foreign Bullion Suppliers who follow OECD guideline
In order to become a qualified jeweller, entities require a minimum net worth of Rs 25 crore and 90 per cent of the average annual turnover in the last three financial years through deals in goods categorised as precious metals.
NRIs and institutes will also be eligible to participate in the exchange after registering with the International Financial Services Centre Association (IFSCA).
Jewellers will be able to transact on IIBX only as trading members or as clients of a trading member. If one wants to become a trader, a a qualified jeweller will have to establish a branch or a subsidiary in IFSC (international financial services centre) and apply to the IFSCA.
When was the exchange announced?
During her 2020 budget speech, Finance Minister Nirmala Sitharaman announced the setting up of India International Bullion Exchange (IIBX) at International Financial Services Center (IFSC) at GIFT City in Gandhinagar, Gujarat, to pave the way for India’s larger role as a global price-setter for bullion.
The MoU between Central Despository Services (India) Limited, India INX International Exchange (IFSC) Limited, Multi Commodity Exchange of India Ltd, National Securities Depository Limited and National Stock Exchange of India Ltd then created the holding company — India International Bullion Holding IFSC Ltd (IIBH). This holding company later operationalised IIBX, Bullion Clearing Corporation and Bullion Depository in IFSC.
The International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020, was notified in December 2020 for trading of precious metals, including gold and silver. These regulations also cover bullion exchange, clearing corporation, depository and vaults.
What products does IIBX offer?
IIBX offers a diversified portfolio of products and technology services at a cost which is far more competitive than the Indian exchanges as well as other global exchanges in Hong Kong Singapore, Dubai, London and New York.
Gold 1 kg 995 purity and gold 100 gm 999 purity with a T+0 settlement (100% upfront margin) are expected to trade at IIBX initially. All contracts will be listed, traded and settled in US Dollar
The exchange will have three vaults – one operated by Sequel Global (ready and approved), the second one to be operated by Brinks India is ready and awaiting final approval and the third is under construction. Once the gold is imported by the authorised entities it will be deposited at one of the vaults which will issue bullion depository receipts. These receipts will then be traded in dollar on the exchange.

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