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Transforming India Gold Market

By Sameer Patil, Head – Business Development, BSE

Published on June 4, 2018

Sameer Patil is Head – Business Development at BSE. He has over 19 years of experience in the financial market and regularly speaks on precious metals in India and at global forums. He joined BSE in July 2015 to head its currency derivatives division, which is now the market leader in this segment and the preferred venue for trading CDX in India. He worked for MCX, India’s top commodities exchange, from its inception for more than a decade as Senior Vice President – PKMT (Precious Metals) & Business Development.

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Gold is intertwined with India’s way of life. The precious metal has a very important place not just in the country’s cultural milieu, but also its economy. This public’s close relationship to gold may be viewed not just from the perspective of tradition but in economic terms as well.

Indians have always invested a portion of their savings in gold and other precious metals. The average Indian household saves over 20 percent of its annual income in the form of gold and silver ornaments. India is the world’s second-largest gold market, with around 800 tonnes of domestic demand per annum, which accounts for around 25 percent of global demand. India’s appetite for gold is met largely through imports, with less than 1 percent coming from local mining and about 10 percent from recycling.

Considering that gold is a hugely popular investment vehicle in India, there is an urgent need for a uniform and regulated market mechanism to facilitate its trading. However, the Indian gold market is extremely fragmented, with prices varying significantly across channels and locations.

Modernising India’s gold market

As the global gold market continues to shift from the West to the East, many Asian countries including China, Singapore and the UAE have set up global-scale physical infrastructure to cater to the growth in demand in the region. Gold exchanges and related infrastructure set up by these countries appear to have greatly enhanced the efficiency of their gold markets.

India, moving in the same direction, has initiated various gold market reforms. BSE, Asia’s oldest stock exchange and the world’s fastest exchange with a speed of 6 microseconds, is contributing in various ways to advance the country’s gold market reforms and initiatives.

Sovereign gold bond schemes

India’s sovereign gold schemes, which include the gold monetisation scheme and the sovereign gold bond (SGB) scheme, are initiatives to reduce the country’s gold imports and allow gold that is lying idle with individuals to be used as an easily accessible financial asset.

SGBs passively track the price of gold and hence functions as an investment equivalent to holding physical gold. BSE is acting as a receiving office, and aggregates applications and the transfer of funds. BSE also provides a secondary market platform for investors who wish to sell these bonds before the maturity, if held in demat form.

Gold spot exchange

India, despite being one of the largest consumers of gold in the world, plays a relatively small role in the global bullion market and in the process of determining the price of gold. Setting up a bullion spot exchange would lead to efficient price discovery, assurance in the quality of gold, active retail participation, greater integration with financial markets, and greater gold recycling. BSE is preparing to launch a bullion exchange for gold that can address lacunae in the gold market. The spot exchange would create a vibrant gold ecosystem in India commensurate with India’s large share of global gold consumption.

Trading platform for commodities derivatives

The Securities and Exchange Board of India (SEBI) has approved the created of an integrated platform for trading in equities, currency and commodities by October 2018, essentially creating a universal exchange. When fully implemented, this would provide a highly regulated, safer and more transparent trading, clearing and settlement framework that would facilitate trades for participants in various markets. With this, BSE hopes to offer commodities derivatives segment to complement its gold offerings.

Global Financial Centre in India

BSE opened India International Exchange IFSC Limited (India INX), the country’s first international exchange, at the International Financial Services Center (IFSC), GIFT city, Gandhinagar, in January 2017. It has one of the world’s most advanced technology platforms and operates for 22 hours a day to allow international investors to trade from anywhere across the globe. India INX offers trading in two variants of gold derivative contracts, the Gold Future and Option Contract and the Gold KG Future Contract, which have recorded significant trading volumes.

The way forward

With its efforts to modernise India’s gold market, BSE should continue to play a pivotal role in growth and development of India’s bullion market going forward, thus enabling gold to serve as a legitimate asset class for millions and for it to play a dynamic economic role.

By extending its platform for gold’s physical market, gold derivatives and distribution of various gold schemes, BSE efforts will enable India to integrate better with global markets, which will allow the country to emerge as a key market for gold.

Sameer Patil is Head – Business Development at BSE. He has over 19 years of experience in the financial market and regularly speaks on precious metals in India and at global forums. He joined BSE in July 2015 to head its currency derivatives division, which is now the market leader in this segment and the preferred venue for trading CDX in India. He worked for MCX, India’s top commodities exchange, from its inception for more than a decade as Senior Vice President – PKMT (Precious Metals) & Business Development.

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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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Margaret Wong

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.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

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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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Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

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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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
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Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
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Mr Nuttapong Hirunyasiri

CEO
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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

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Mr Andrew Clarke

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

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Mr Kazuya Naoki

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

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

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