SEBI Plans Reforms to Boost Gold Price Benchmark
The Securities and Exchange Board of India (SEBI) has said it will examine and address key challenges facing Electronic Gold Receipts (EGRs), aiming to strengthen their role in gold price discovery and improve India’s commodity market ecosystem. The announcement came from SEBI’s chairman during a commodities industry event in New Delhi.
Focus on EGRs and Gold Market
SEBI officials noted that EGRs were introduced to create a regulated market for gold and help India emerge as a credible price setter. In practice, however, the EGR framework has seen limited participation and liquidity since it was launched, prompting a review of operational barriers and regulatory issues that may be hindering wider adoption.
Addressing Market Barriers
One key area SEBI plans to address is taxation hurdles, including complexities related to the Goods and Services Tax (GST) that participants say discourage activity in EGR trading. The regulator also reaffirmed efforts to encourage trading only in regulated gold products such as EGRs, gold exchange-traded funds (ETFs) and commodity derivatives to protect investors.
Broader Commodity Market Reforms
SEBI said reviving and expanding the commodity derivatives market remains a priority. The regulator has formed working groups to examine obstacles faced by exchanges and market participants, including issues in both agricultural and non-agricultural commodity segments. Measures being considered include ways to increase liquidity, enhance participation, and improve price risk management.
