PM Modi To Launch India's First International Bullion Exchange Tomorrow. Know All About It

IIBX will facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialisation of gold in India

Prime Minister Narendra Modi will launch the country's first international bullion exchange (IIBX) on Friday during his two-day Gujarat visit. Modi will also lay the foundation stone of the headquarters of the International Financial Services Centres Authority (IFSCA), the unified regulator for the development and regulation of financial products, financial services, and financial institutions, PTI reported. In the Union Budget 2020-21, Finance Minister Nirmala Sitharaman had announced setting up of IIBX at IFSCA.

What is International Bullion Exchange (IIBX)?   

Bullion typically refers to physical gold and silver of high purity that is mostly kept in the form of bars, ingots, or coins. At times, bullion is considered as legal tender and often held as reserves by central banks or held by institutional investors.

IIBX, the first International Bullion Exchange set up at the GIFT City, will facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialisation of gold in India, said a statement by the IFSC Authority.

It will also offer a diversified portfolio of products and technology services at a competitive cost compared to other Indian exchanges as well as other global exchanges in Hong Kong Singapore, Dubai, London and New York, according to Mint report.  

Who owns IIBX?

The IIBX is jointly owned by NSE, Multi Commodity Exchange (MCX), India INX International Exchange, National Securities Depository (NSDL), and Central Depository Services (CDSL).

It is expected that Gold 1 kg 995 purity and gold 100 gm 999 purity with a T+0 settlement (100% upfront margin) will be traded at IIBX initially, as per the Mint report. All contracts are listed, traded & settled on IIBX are in US Dollars.

As of now, around 60 qualified jewellers have signed up for IIBX, according to PTI report.

How does it benefit India?

"This shall empower India to gain its rightful place in the global bullion market and serve the global value chain with integrity and quality. This also re-enforces the commitment of the Government of India towards enabling India to be able to influence global bullion prices as a principal consumer," the IFSC Gandhinagar (International Financial Services Center) told PTI.

International Bullion Exchange shall be the gateway for Bullion Imports into India, wherein all the bullion imports for domestic consumption shall be channelized through the exchange, as per a government's notification. Going by the Times of India report, the imported gold will be stored at the IFSC approved vault and post that a depository receipt will be issued after which the gold will be ready for trading.

The exchange is designed to contain three vaults and one of them owned by Sequel Global is already ready and approved, as per the report. The second vault operated by Brinks India is ready abut awaiting regulatory approval while the third vault is still under construction.

The PM will also lay the foundation stone of the unified regulator International Financial Services Centres Authority's headquarters. He will also launch NSE IFSC-SGX Connect.