India launched its first international bullion exchange on Friday as the world’s second-biggest consumer of precious metals tries to bring transparency to the market for the precious metals. India International Bullion Exchange (IIBX), is based in Ahmedabad, Gujarat International Finance Tec-City, or GIFT City in western Gujarat state.
It could lead to standard gold pricing in India and make it easier for small bullion dealers and jewelers to trade. Gold has a tight regulation in India. Only nominated banks and agencies approved by the central bank can import gold and sell it to dealers and jewelers.
“IIBX with its technology-driven solutions will facilitate the transition of the Indian exchange market into an organized structure by granting direct access to import gold directly,” the exchange said in a statement.
China, the top gold consumer, runs such a bourse, where all domestic production and imported gold have to be bought and sold.
India imported 1,069 tonnes of gold in 2021, up from 430 tonnes a year ago. Indian households own an estimated collective 25,000 tonnes of gold. New Delhi has been trying to monetize these holdings to reduce imports.
The Multi Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX) offer gold futures contracts in India, but there wasn’t any physical exchange to buy gold.
About IIBX
India’s bullion market is one of the largest in the world, the second largest in terms of consumption, and holds an important position globally, though lacks organization and structure.
The Finance Minister Ms. Nirmala Sitharaman in the 2020 Union Budget gave a major boost to this aspiration by announcing the setting up of the India International Bullion Exchange (IIBX) at the International Financial Services Center (IFSC) at GIFT City in Gandhinagar, Gujarat.
Consequently, IIBH has set up the Bullion Exchange India International Exchange IFSC Limited (IIBX). It encompasses the Bullion Exchange and the Bullion Clearing Corporation. IIBX is India’s first International Exchange set up at GIFT City. It would be inaugurated by our PM Narendra Modi, on July 29, 2022.
Regulation Overview
IIBX is comes under regulation by the International Financial Services Centres Authority (IFSCA). The IFSCA was established on April 27, 2020, under the International Financial Services Centres Authority Act, 2019. Headquartered at GIFT City, Gandhinagar in the state of Gujarat, the IFSCA is a unified authority for the development and regulation of financial products, financial services, and financial institutions.
It is presently, the only International Financial Services Centre (IFSC) in India. IFSC’s holistic vision is to promote ease of doing business in the IFSC and provide a world-class regulatory environment while developing a strong global connection as an international financial platform for the entire region and the global economy as a whole.
Who will head the IIBX?
Ashok Gautam will head IIBX as MD and CEO. He took charge in February 2022 and worked with IDBI Bank before this. He has earlier worked with the State Bank of India (SBI). The exchange was to be inaugurated in October 2021 but was postponed due to the Vibrant Gujarat Summit in January 2022.
How will IIBX work?
Registered Indian Jewellers list and traders will be able to sell and buy physical gold and silver in the exchange. For this, they will have to become a trading partner or a client of an existing trading member.
A branch or a subsidiary needs to be opened with IFSC for the same. The Indian jewellers list who do not have a physical presence in India will also be able to transact the metals. But they will not be allowed to connect with a client under them.
The IIBX exchange is expected to bring transparency to the price-setting mechanism. This is to provide standardization to the financial system for the bullion in India. It shall also work as a standard-setting tool for the quality of the bullion.
Contribution to Metal Trading
IIBX will be open for a list of jewellers in India with a net worth of Rs 25 crore and above to participate. PM Narendra Modi will on Friday launch India’s first bullion exchange IIBX, in GIFT city in Gujarat.
Since the liberalization of gold imports through nominated banks and agencies in the 1990s, the eligible qualified Indian jewellers list in India, are notified by International Financial Services Centres Authority (IFSCA). It has been allowed to directly import gold through IIBX.
The IIBX exchange will be open for a list of Indian jewellers in India with a net worth of Rs 25 crore and above to participate. NRIs and institutes will also be eligible to participate in the exchange after registering with the IFSCA.
What will be trading at the exchange initially?
In the early stage, gold 1 kg with 995 purity and gold 100 grams with 999 purity will be trading with a settlement period of T+0. Further, the exchange is expecting to extend the settlement period to T+2 days.
Products:
- GOLD 995 T+0 (Trading Unit – 1 kg (31.99 troy ounce))
- GOLD MINI 999 T+0 (Trading Unit – 100 grams (3.212 troy ounces))
- Trading Period – Exchange Business Days
- Trading Session – 9.00 AM to 3.30 PM / 4.30 PM (depending on daylight savings) India time
- Price Quote – U.S. dollars and cents per troy ounce
- Maximum Order Size – 10 kg
- Tick Size (Minimum Price Movement) – US$0.10 (Margin – 100%)
Conclusion
In conclusion, IIBX revolutionizes Indian metal trading by providing a transparent, efficient digital exchange platform. It is fostering accessibility, reducing costs, and streamlining the trading process for various metals. Thus significantly enhancing the metal trade ecosystem within India.
