Sebi on Monday came out with product specifications related to electronic gold receipts.
Last month, the regulator issued standard operating guidelines for vault and warehouse managers in the Electronic Gold Receipts (EGR) sector.
According to Sebi, the EGR will be traded on stock exchanges in a “trading unit” and the same will be determined by the exchanges.
“The stock exchanges will ensure that the trading unit is not less than the tenth part of the corresponding deposit unit,” it said in a prospectus.
For example, when depositing 100 grams of gold bullion, 1 EGR can be generated with 100 grams of trading unit or 10 EGRs at 10 grams per trading unit.
The circular stated that “any person wishing to deal in the Egyptian Stock Exchange must deposit gold with the treasury managers registered in the “depository unit” determined by the stock exchanges.”
Among other things, Sebi said that exchanges should publish adequate information for investors, especially for EGR agencies with different deposit and trading units.
The circular stated that “the details of the deposit unit/withdrawal unit and the trading unit/delivery unit must be clearly specified in the specifications of the exchange contract.”
Under the rules, a complete transaction involving EGRs can be divided into three tranches – converting physical gold into EGR, trading EGR on an exchange and converting EGR into physical gold.
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