SEBI issues master circular on electronic gold receipts (EGR)
MUMBAI (India CSR): The Securities and Exchange Board of India (SEBI) issued a master circular on electronic gold receipts (EGR) on June 2, 2023. The circular consolidates the existing guidelines and norms for EGR issued by SEBI from time to time.
EGR are electronic records of gold deposits in designated vaults that can be traded on stock exchanges. EGR are intended to provide an alternative and cost-effective way of investing in gold without physical delivery.
The circular covers various aspects of EGR such as eligibility criteria, registration process, operational framework, disclosure requirements, risk management, grievance redressal mechanism and inspection by SEBI.
Electronic Gold Receipts (EGR)
An Electronic Gold Receipt (EGR) is a digital asset that represents ownership of physical gold. EGRs are issued by banks and other financial institutions, and they can be bought and sold on exchanges just like stocks and bonds.
Some of the key features of the circular are:
EGR can be issued by vault managers who are registered with SEBI as intermediaries and have adequate infrastructure, security and insurance arrangements for storing gold.
EGR can be issued for a minimum quantity of 1 gram and in multiples thereof. The purity of gold underlying EGR should be 995 fineness or higher.
EGR can be traded on stock exchanges in the dematerialized form through depositories and clearing corporations. The settlement of EGR transactions will be done through delivery versus payment (DVP) mechanism.
EGR holders can redeem their EGR for physical gold or cash at any time subject to the terms and conditions specified by the vault manager and the stock exchange.
EGR holders will have to pay storage charges to the vault manager as per the agreed terms. The vault manager will also have to pay a fee to SEBI for issuing and maintaining EGR.
EGR issuers and stock exchanges will have to make periodic disclosures to SEBI and the public regarding the details of EGR issued, redeemed, traded and outstanding.
SEBI will monitor the compliance of EGR issuers and stock exchanges with the circular and take appropriate action in case of any violation or irregularity.
The circular is expected to promote the development of a transparent and efficient market for gold in India and provide investors with a convenient and secure way of investing in gold. The circular will come into effect from July 1, 2023.
The following topics have been featured in the presentation:
What is an EGR?
How does an EGR work?
Benefits of investing in EGRs
How to buy an EGR
How to sell an EGR
What are the risks of investing in EGRs?
How are EGRs taxed?
What are the tax benefits of investing in EGRs?
The future of EGRs
How to choose the right EGR for you
Where to learn more about EGRs
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