What Challenges Does SEBI Face in Accepting Electronic Gold Receipts?
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Synopsis
SEBI Chairman Tuhin Kanta Pandey is set to investigate the challenges in the acceptance of Electronic Gold Receipts (EGRs) as a reliable gold pricing benchmark in India. This initiative aims to enhance the commodities market ecosystem and address key issues including GST-related hurdles.
Key Takeaways
- SEBI is investigating the challenges facing Electronic Gold Receipts.
- Addressing GST-related issues is crucial for EGR acceptance.
- EGRs enhance transparency in gold trading.
- Legal recognition of EGRs was established in December 2021.
- The launch of PaRRVA aims to improve investor trust.
New Delhi, Dec 20 (NationPress) The Chairman of SEBI, Tuhin Kanta Pandey, has announced that the market regulator will thoroughly investigate the significant hurdles that are hindering the acceptance of Electronic Gold Receipts (EGRs) as a credible and extensively embraced benchmark for gold price discovery in India.
During an event hosted by the Commodity Participants Association of India (CPAI), Pandey indicated that SEBI is assessing a variety of structural, operational, and regulatory obstacles that have restricted the uptake of EGRs since their launch.
This review is part of SEBI’s wider initiative to fortify the commodities market ecosystem and enhance participation across various commodity sectors.
One of the crucial areas under examination is the influence of Goods and Services Tax (GST) issues, which market stakeholders believe could be a significant friction point for liquidity and broader acceptance of EGRs.
Pandey emphasized that addressing these concerns is vital for EGRs to contribute meaningfully to domestic gold price discovery.
EGRs are instruments that facilitate the conversion of physical gold into an electronic format, allowing for more transparent and standardized trading on exchanges. The legal recognition of EGRs as securities was established in December 2021.
In a previous announcement, while launching the Past Risk and Return Verification Agency (PaRRVA), Pandey mentioned that this platform would offer investors “reliable performance data” and provide regulated entities with a means to showcase authentic performance to clients.
SEBI's pilot launch of PaRRVA is described as “a groundbreaking global initiative to validate risk-return metrics by investment advisors, research analysts, and trading members,” according to an official statement.
“Investor transparency is fundamental to sustainable market growth. PaRRVA reinforces SEBI’s steadfast commitment to ensuring that India’s securities markets remain fair, transparent, orderly, and resilient,” stated the SEBI Chairman.
Pandey asserted that PaRRVA will equip investors with “clarity and confidence” by enhancing transparency and standardization in performance claims made by financial intermediaries.
Point of View
It is essential that SEBI's investigation into Electronic Gold Receipts is comprehensive and considers the diverse challenges impacting their acceptance. As the market continues to evolve, ensuring a robust framework for EGRs can enhance transparency and participation, ultimately benefiting investors and the broader economy.
NationPress
20/12/2025
Frequently Asked Questions
What are Electronic Gold Receipts (EGRs)?
EGRs are financial instruments that represent the conversion of physical gold into an electronic format, allowing for more transparent and standardized trading on exchanges.
Why is SEBI examining the challenges of EGRs?
SEBI is looking into the challenges to strengthen the commodities market ecosystem and enhance the acceptance of EGRs as a reliable benchmark for gold price discovery.
What impact do GST-related issues have on EGRs?
GST-related issues are seen as a friction point that may hinder liquidity and broader acceptance of EGRs in the market.
What is the legal status of EGRs?
EGRs received legal recognition as securities in December 2021.
What is the purpose of the Past Risk and Return Verification Agency (PaRRVA)?
PaRRVA aims to provide credible performance data to investors and allow regulated entities to showcase genuine performance to clients.
