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Hybrid India Gold Conference 2021

By Bullion World

Published on December 10, 2021

The Hybrid India Gold Conference on 12-13 November 2021 in Jaipur, India brought together over 270 delegates, 25 sponsors and 44 speakers, with 130 delegates joining virtually during the two-day conference to discuss the theme “Reforms Shaping India’s Bullion Markets”. The highlights of the conference are presented below.

Gold is a part of India’s culture and a way of life of every Indian. The sector employs 6 million people and contributes 1.5% of GDP. India accounts for 25% of global gold consumption. Above-the-ground stock held by Indian citizens is estimated at 25,000 tonnes. On the supply side, 1% is mined, 9% is recycled, while about 90% is imported. On the demand side, 75% goes for jewellery making, about 7% goes for making coins and 2-3% for financial products. Thus, India is still passive in the global market despite strong demand.

India International Bullion Exchange (IIBX) is being set up at the Gujarat International Finance & Tec-City (GIFT City), Gandhinagar, Gujarat, India – the first special economic zone (SEZ) in India set up exclusively for the financial services sector. In addition to IIBX (to be launched in January 2022), GIFT City plans to host a world-class bullion refinery. It is expected that all bullion imports into India will be routed through IIBX. It is currently reaching out to significant bullion suppliers to India, global and regional bullion banks, leading LBMA/DGD refiners and other non-bank overseas suppliers to join the IIBX eco-system.

Meanwhile, the Securities and Exchange Board of India (SEBI) is developing guidelines for establishing a gold spot market for the domestic tariff area. Both IIBX and domestic gold spot exchanges trade electronic receipts (ERs). Guidelines and rules are being formulated to integrate IIBX and the domestic spot gold exchange system.

“IIBX can trigger a lot of reforms. It can help in price discovery, supply-chain integrity enforcement, and promoting gold’s financialisation in a big way. Soon, there will be significant liberalisation in foreign trade policy in so far as gold is concerned, as I see it. We want to promote IFSC as a hub for refineries and vaults. Our vision is to develop IFSC as one of the most competitive ecosystems for gold. Everyone has to progress for the world to progress and for progress to be sustainable”, Mr Injeti Srinivas, IFSCA chairperson, said about these developments.

“The success of IIBX depends largely on the participation of buyers and sellers in exchange. We must create an enabling mechanism for the participation of the international community. It is also essential for the domestic player to participate in the exchange within the permitted capital control regulation. IBJA would work closely with IFSCA in creating a world-class global exchange”, Mr Prithviraj Kothari, IBJA national president, said.

Complimenting India for the reforms in bullion space, Ms Ruth Crowell, CEO, LBMA said, “During my address at an IBJA conference three years ago, I suggested, “India should make a business case that works for India and also brings the world to India.” So, I am very happy to see so many developments during the last three years leading up to the International Exchange for Bullion in India. When we meet at next year IGC, I hope to congratulate you on two developments. First, a second LBMA accredited gold refiner in India. Second, a Bullion Bank that participates in LBMA gold price. It’s long overdue for India to have a seat at the LBMA table”.

Elaborating more on the gold spot exchange for domestic tariff area, Mr. V S Sundaresan, executive director, Securities and Exchange Board of India (SEBI), the regulator for capital and commodity markets, noted that SEBI will regulate the entire ecosystem of the Gold Exchange, including the vault manager.

The framework of the gold spot exchange is as follows. The entire transaction flow has been framed into three tranches. The first tranche is a deposit of physical Gold into the vaults and the creation of Electronic Gold Receipts (EGR). The second tranche will involve trading the EGR, and the third tranche will be a conversion from EGR to physical Gold. The framework includes the fungibility with the vault managers. Mentioning the commodity’s liquidity, to bring a large client base, especially the retail investor to this platform, the concept of a smaller denomination of EGR has been proposed. The investors will be allowed to buy and sell smaller units of EGR.

Some overseas suppliers present at the conference felt that IIBX is a very positive development for the Indian bullion market. Many felt that IIBX would also provide an excellent opportunity for Indian nominated banks to grow into full-fledged bullion banks.

Important quotes:

WGC and LBMA are working together on the “Gold 24/7 Plan”. The key aspects of this plan are gold needs to uphold integrity; physical gold should be fully accessible; and lastly, gold should be fully fungible and be freely traded across the global markets.

Mr David Tait, CEO, WGC

On request from India, LBMA proposes to review the following non-technical criteria in its LGD 2022 meeting. (1) Whether any other parameters be considered in lieu of tangible net worth criteria proposed for LGD applicant and (2) whether the criteria of ‘average 10 tonnes gold refined in the past three years’ be relaxed for a large silver refiner.

Ms Ruth Crowell, CEO, LBMA

Almost 4.5 tonnes and 5.7 tonnes of Gold was delivered at MCX, the largest commodity derivatives exchange of India in 2020 and 2021 (till October end) respectively.

Mr P S Reddy, MD & CEO, MCX

The industry needs to engage with government to evolve a standard operating procedure (SOP) for recycled gold

Mr Prithviraj Kothari, National President, IBJA

OTHER HIGHLIGHTS

  • Standard gold bullion imports into India is expected to cross 1,000 tonnes in FY22.
  • Digital gold platform providers recognise the risk and propose self-regulation.
  • Prof Arvind Sahay, Chair, IGPC, IIMA, shared initial results of the pan-India survey on “Understanding India gold consumers”.
  • Over 25 companies and individuals were conferred IGC Excellence Award for their achievements during FY20 and FY21.
  • Retail Gold Investment Principles (RGIP) initiative championed by WGC India (Swarna Adarsh Abhiyaan) launched formally.
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Emily Oh

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Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Fabian Lew

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Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

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Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

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Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

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Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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