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India's First International Bullion Exchange


On 29th July 2022, India International Bullion Exchange (IIBX) was launched at Gujarat International Finance Tec-City (GIFT City) - India’s maiden International Financial Services Centre (IFSC).

Operator of the IIBX

  • A holding company India International Bullion Holding IFSC will operate the International Bullion Exchange.
  • It has been established by the National Stock Exchange, Multi Commodity Exchange, India INX International Exchange, National Securities Depository and Central Depository Services Ltd.

Some Criteria for Trading in IIBX

  • To become a qualified jeweller, one must have 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.
  • Apart from qualified jewellers, non-resident Indians and institutions will also be able to participate on the exchange after registering with the IFSCA.

Some other Facts

  • 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 under construction.

Working Procedure

  • Once gold is imported, it will be stored at the IFSC Authority-approved vault.
  • Following this, a bullion depository receipt will be made and the gold will be ready for trading.
  • Being a spot exchange, all the open positions will be marked for delivery at the end of the day.

Advantages

  • The IIBX will be a gateway for bullion imports into India, where all bullion imports for domestic consumption shall be channelised through the exchange.
  • In addition to providing a trading avenue to various participants, a bullion exchange will also offer the advantages of price discovery, transparency in disclosures, guaranteed centralised clearing and assurance of quality.
  • A bullion exchange, apart from providing standardisation and transparent mechanism, will also be an important step towards financialisation of bullion-based products.

Bullion

  • Bullion refers to physical gold and silver of high purity often kept in the form of bars, ingots, or coins.
  • It can be considered legal tender and is often held as reserves by central banks or held by institutional investors.

Bullion Exchange

  • A bullion exchange allows buyers and sellers to trade gold and silver as well as associated derivatives.

Primary Bullion Trading Platform in the World

  • Though there are several bullion markets around the world, the London Bullion Market, which allows trading 24 hours a day and facilitates futures and options trading, is the primary global market trading platform for gold and silver.
  • These bullion markets are typically over-the-counter (OTC) markets, that is to say, they deal in physical gold and silver.