Bombay Stock Exchange’s Electronic Gold Receipt

The Bombay Stock Exchange (BSE) has received approval from the Securities and Exchange Board of India (Sebi) for its Electronic Gold Receipt (EGR), India’s first spot physical gold exchange product.

Background

• In India, electronic gold trading happens through gold derivatives or gold exchange-traded funds (ETFs) on stock exchanges.
• EGR is the first spot physical gold exchange trading product.
• In the Union Budget 2021-22, the government announced the setting up of a SEBI-regulated gold spot exchange.
• Then, on September 28, 2021, Sebi introduced two new investment instruments,
  • EGR
  • silver ETFs

What Is An EGR?

• EGRs are depository gold receipts traded on the stock exchanges. They are held in Demat accounts, just like shares.
• For EGRs, the physical gold is sourced through imports, accredited domestic refineries, or designated delivery centers. 
• The buyer could convert the physical gold into an EGR by depositing the yellow metal at the designated delivery center. After the gold is sourced, a depository receipt is created for trading on BSE.
  • For example, a buyer can sell the EGR or convert it to physical gold.