International Bullion Exchange Conducts Its Pilot Run

International Bullion Exchange will go live on 1st October 2021 on the Foundation Day of IFSCA. Before that, Injeti Srinivas, IFSCA Chairperson said that the pilot run of the International Bullion Exchange (IBE) was conducted at Gujarat International Fin-Tec (GIFT) City, Ahmedabad.

The exchange comes under the International Financial Services Centres Authority (IFSCA - Bullion Exchange) Regulations, 2020. CDSL-IFSC, a foreign depository is designated as the bullion depository for IBE. It will be responsible for managing the vault manager.

Injeti Srinivas has commented the IBE shall be the "Gateway for bullion imports into India and all bullion imports for domestic consumption shall be channelized through the exchange." The IBE Regulations 2020 was notified on December 11, 2020, followed by FM Nirmala Sitharaman's announcement at the Union Budget 2020-21. It will cover the Bullion Exchange, clearing corporation, depositories, and vaults.

Why is the exchange important?

The exchange will invite all market participants to a common platform for bullion trading. It will be a transparent platform for efficient price discovery, assurance in the quality of gold, greater integration with the other segments of financial markets. It is expected to establish India's place as a dominant trading hub in the global picture.

As the IFSCA statement, "The exchange ecosystem is expected to bring all the market participants at a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India's position as a dominant trading hub in the World."

There is no spot exchange for bullion in India. Hence, IIBH is expected to attract a clump of the global bullion trade. A formal pilot run will strengthen the road of IBE further, towards better clarity and efficiency.

India International Bullion Holding IFSC Ltd. (IIBH), a holding company will operate the IBE, Bullion Clearing Corporation, and Bullion Depository in IFSC, GIFT City. IIBH was setup after a memorandum of understanding (MoU) between the National Stock Exchange of India (NSE), Multi-Commodity Exchange of India (MCX), India INX International Exchange (INDIA INX), National Securities Depository Ltd (NSDL), and Central Depository Services (India) Ltd (CDSL).