The National Stock Exchange (NSE) is set to start trading electronic gold receipts on its platform and that market regulator Sebi is working with the government to resolve some taxation difficulties relating to the commodity.

The Securities and Exchange Board of India (Sebi) introduced the Electronic Gold Receipt (EGR), and the BSE debuted it approximately a month ago. V S Sundaresan, Executive Director at Sebi said, "we hope that this product would undoubtedly gain acceptance over a period of time." In order to use this product, the physical gold must be deposited in a vault. The vault manager will then issue an electronic receipt, which will be credited to the investor's demat account and can be traded on the stock exchange.

Thus, Sundaresan explained, the gold will remain in a vault but will produce some form of revenue, and the unutilized gold might be used in useful ways. 

The Bombay Stock Exchange (BSE) launched Electronic Gold Receipt trading on its platform. During the Muhurat trading on Diwali, it unveiled two new goods with purity ratings of 995 and 999. The exchange had stated in a statement that trading could be done in multiples of 1 gramme and deliveries could be made in multiples of 10 gramme and 100 gramme.

''It is a new segment. The BSE has come forward. The NSE is expected to do it shortly. We are working on the proposal.  We are working with the ministry and we are hopeful that this product would make gold trading more transparent and more satisfying for investors. There are some tax-related difficulties that need to be resolved. Sundaresan stated at an Assocham summit, "We are hopeful that this will help the unutilized or the physical gold which is lying idle can be turned into more economically transferable form, he said.

The BSE gained in-principle approval from Sebi in February, and the exchange then held multiple dummy trades for its members in the test environment to enable trading in EGRs.

Due to the fact that EGRs will serve all market participants, buyers and sellers on the exchange will include both private investors and business participants from all points along the value chain, such as importers, banks, refiners, bullion traders, jewellery producers, and retailers.

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