In the Union Budget 2020, Union Minister of Finance Corporate Affairs Smt. Nirmala Sitharaman had made an announcement for setting up an International Bullion Exchange at the International Financial Services Centre in GIFT City, Gandhinagar, Gujarat.
Subsequently, the Government of India had notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the International Financial Services Centres Authority (IFSCA) Act, 2019.
The International Financial Services Centres Authority (IFSCA) has been established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019. It is headquartered at GIFT City, Gandhinagar in Gujarat.
The IFSCA has been established a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India. Prior to the establishment of IFSCA, the domestic financial regulators, namely, RBI, SEBI, PFRDA and IRDAI regulated the business in IFSC. has been
In September 2020, the Union government on Monday notified the setting up of the International Bullion Exchange at the Gujarat International Finance Tec (GIFT) City near Ahmedabad and entrusted IFSCA with the responsibility of operationalization of Bullion Exchange.
Now in December 2020, International Financial Services Centres Authority (Bullion Exchange) Regulations 2020 have been notified and published in the Gazette of India.
Gift City International Financial Services Centre (IFSC) is set to get India’s first spot bullion exchange and this may happen in the next six months. At present, the GIFT IFSC is the only international financial services centre in India. The exchange will lead to better price discovery of gold, create more jobs and enhance India’s position in such market.
The government has notified regulations for setting up the bullion exchange in Gift City IFSC. Consequently, all the three major Indian bourses like BSE, National Stock Exchange (NSE) and Multi-Commodity Exchange (MCX) plan to compete at Gift City’s special economic zone (SEZ) by setting up their own bullion exchanges after getting formal approval from the regulator.
What is Bullion ?
Bullion is gold and silver that is officially recognized as being at least 99.5% pure and is in the form of bars or ingots. Bullion is often kept as a reserve asset by governments and central banks.
Consequently, a bullion market is a market through which buyers and sellers trade gold and silver as well as associated derivatives.