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India Gold Conference 2022: IIBX, Domestic Gold Exchange And India-UAE Agreement Dominate Conversation

By Bullion World

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India Gold Conference 2022, which saw the participation of over 500 delegates, concluded successfully on July 31, 2022 at the Grand Chola, Chennai. Three key topics dominated the conversation amongst delegates.

First, India International Bullion Exchange (IIBX). The conference coincided with the launch of IIBX by India Prime Minister Narendra Modi on July 29, 2022 at Gift City, Gandhinagar, Gujarat. Second, domestic spot gold exchange. The regulations on the domestic spot gold exchange have been prepared. Third, the UAE-India Comprehensive Economic Partnership Agreement (CEPA), operational since May 1, 2022. Under CEPA, import duty on gold bullion from UAE is 1% lower than other origins, up to 120 tonnes in the first year (2022-2023), going up to 200 tonnes in the fifth year. Likewise, there are customs duty concessions of up to 0.5% on silver bullion imports (without any quota restriction) for the current year.

Speaking at the inaugural function, Prithiviraj Kothari, national president, India Bullion & Jewellers Association (IBJA) said, “IIBX will bring in complete transparency in the way India imports gold. Domestic Spot Gold Exchange (DSGE) is a game-changer. It will trade Electronic Gold Receipt (EGR), one of its kind products that convert gold into security for perpetuity. EGR is a reversible product, provides for robust settlement system, deliverable at multiple delivery centres, facilitates goods recycling, promotes greater integration with financial market and assures delivery of certified goods. It would also give fillip to the Gold Monetisation Scheme (GMS)going forward”.

IIBX IS AN IMPORTANT MILESTONE FOR INDIA, THE ONE THAT REINFORCES INDIA’S POSITION AS ONE OF THE LARGEST MARKETS FOR PHYSICAL CONSUMPTION OF GOLD. BY LINKING JEWELLERS, THE EXCHANGE MAKES WAY FOR CREATING AN EFFICIENT MARKETPLACE FOR JEWELLERS TO ACCESS CERTIFIED METAL. IT IS ALSO THE FIRST TIME ANYWHERE IN THE WORLD, THROUGH PRE-FUNDED METAL AND CURRENCY ACCOUNT, THE IDEA OF SAME DAY SETTLEMENT (T+0) IS BEING ATTEMPTED.

– David Gornall, Senior Consultant, LBMA

IIBX is regulated by the International Financial Services Centres Authority (IFSCA), the unified regulator for financial services sector located in Special Economic Zones (SEZs) in India. Delivering his special address, Kamlesh Sharma, IFSCA general manager and head of precious metals, said, “Yesterday, we witnessed the historic launch of IIBX at the hands of our beloved PM Shri Narendra Modi. Now the real work starts. Forums such as the India Gold Conference provide an opportunity for us to learn about the industry and understand its expectations. We have begun with T-0 contract at IIBX. The introduction of Qualified Jewellers (QJ) framework is to bring disintermediation benefits. We do understand the role of banks. Very soon, we may see banks being permitted. We are fortunate to have a lot of foreign banks’ IFSC Banking Unit (IBU) already located in IFSC. These foreign banks, we believe, would soon become trading members of IIBX.

He added that IFSCA is also looking at providing remote access to some of the QJs that want to only do self-trading. One of the Indian banks’ international business unit has already joined as a Professional Clearing Member (PCM), and he hopes more Indian banks will join as PCMs going forward”.

On the international side, that is the supplier side, IFSCA is working hard to listen to them and enrol them as well, Sharma said. “We hope to see more foreign banks join in as trading members. We are looking at providing remote access to select suppliers, provided they comply with regulations on responsible sourcing and so on. We will soon come up with an SOP, hopefully by August end”.

With CEPA, Tariff Rate Quota (TRQ) holders will be granted QJ status. Going further, Sharma said he would like to see T+2 and the whole range of derivatives at IIBX. “We would also be having a consultation on the integration of accredited refiners in domestic tariff area (DTA) and the new refiners that may come up within the IFSC zone and so on. We plan to do all these things through continuous consultation and engagement with the industry”, Sharma said.

Ahmed Bin Sulayem, DMCC executive chairman and CEO, was the chief guest of the conference. Delivering his keynote address he said, “DMCC, when conceptualised, was a gold initiative. From inception, there has been a lot of participation from the Indian community – be it in technology, market development and in almost every field. We contributed to it. At present, three refiners operate in Dubai. There is soon going to be a fourth one. India leads the market when it comes to gold. It is an interesting industry here. And the industry is changing. You have heard about Uptown Tower. Dubai has changed too in the last 20 years. Twenty years ago, gold in Dubai meant coins and bars and was controlled by a few families. Today we have over 3,000 companies operating in gold, diamonds and precious metals inside DMCC”.

“The UAE-India agreement is just the beginning. I expect more to come. I would like to discuss forward product possibilities. With Uptown Tower, we have built a new foundation. We want to climb a new mountain. Gold is what DMCC started with. Gold is what attracted some of the designers to work on the project. We are here to engage. We are looking for a representative office in India. We have not decided where, may be in southern India or in Mumbai”, Bin Sulayem added.

Delivering his special address VS Sundaresan, executive director, Securities & Exchange Board of India (SEBI), the regulator of the domestic gold spot exchange said that gold imports into India increased from US$28.23 billion in 2019-20 to US$ 46.16 billion in 2021-22. Together, India and China have doubled their market share in two decades from 23% to around 46% of global demand.

“The launch of IIBX is a historic step. It will facilitate efficient price discovery, assured quality, responsible sourcing compliance, financialisation of gold in India, greater integration with other segments of the financial markets and establishment of India’s position as a dominant trading hub.”, Sundaresan said.

He noted that while IIBX is regulated by the International Financial Services Centres Authority (IFSCA), the domestic spot gold exchanges (SGE) will be regulated by SEBI. New and existing recognised stock exchanges would be permitted to set up SGE, and the framework for the creation of EGR, trading of EGR on stock exchanges and conversion of EGR into physical gold has been developed. “Provisions have been made for fungibility and interoperability of EGRs between vaults. All existing branches of the vault managers are allowed as withdrawal centres. Storage and withdrawal charges will be levied by the vault manager and will be collected by the depository. Clearing Corporation will empanel assaying agencies. Investors can organise their own trusted transportation for movement of gold from vaults to their preferred location. In so far as SGE and EGR are concerned, SEBI is working more as a market development organisation”, he added.

Views On Gold Price Outlook

In 2022, gold prices got support from the ongoing conflict in Russia and Ukraine, the trade restrictions on Russia and the increase in the price of all major commodities – crude oil, natural gas, copper, grains, edible oils etc., leading to record high inflation. High inflation, we believe, will remain for at least one more year. Gold price is caught between high inflation and recession.
Prithiviraj Kothari
National President, India Bullion & Jewellers Association

Gold price has been on the upswing since 2016 until recently. For this upmove, there has to be a healthy correction, which in my view is 50% retracement. I expect gold to gradually correct towards US$1,550 per troy ounce soon. Of course, no market moves in a straight line; there may be a temporary upmove. I see gold market consolidating between US$1,850 and US$1,550 per troy ounce in the next year.
Debajit Saha
Lead Analyst Precious Metals, Refinitiv

On gold price outlook, recessionary concerns could limit downside in gold prices, while a U-turn on hawkish stance could push gold higher.
Chirag Mehta
CIO, Quantum Asset Management

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

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

He has joined SBMA since February, 2022.

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BUSINESS DIRECTOR

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.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

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Albert Cheng

Chief Executive Officer

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.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

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Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
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Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

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Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

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Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

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Head of Precious Metals, Asia
StoneX APAC Pte Ltd

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
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