IBJA hires consultancy firm EY to draw blueprint for developing bullion spot exchange in India

KOLKATA: Indian Bullion and Jewellers Association has hired consultancy firm EY to draw a blueprint for developing a bullion spot exchange in the country on the lines of the Shanghai Gold Exchange.

The association has also mandated the London-headquartered consultancy to come up with suggestions to popularise the government’s gold monetisation scheme, which has received a lukewarm response so far.

“At present, the bullion market is unregulated in the country. If we can establish the exchange then it will be easier for all stakeholders in the trade,” said Ketan Shroff, spokesman of IBJA.

Shroff said EY is expected to table the report within a month, after which the association will approach the finance ministry. “China, the second largest consumer of gold, has already established the Shanghai Gold Exchange. We also need to do something,” he said.

The Shanghai Gold Exchange launched a gold trading platform on September 18, 2014 with 11 yuan-denominated gold contracts. The international board, as the platform is known, is in the city’s free-trade zone, making it open to foreign investors. The contracts on the new exchange are physically settled and traded between bullion banks, refiners, producers and trading houses. Members of the Chinese Gold & Silver Exchange Society in Hong Kong began trading on the exchange directly on July 10, expanding ways to access the bullion market in China.

T Gnanasekar, director of Commtrendz Research & Fund Management, said, “If the spot exchange comes up it will help the trade depending on the sort of products that will be offered.” “Since the exchange is proposed to be run by the industry people, I feel that better and innovative products will be offered,” he said. EY will also suggest ways to make the gold monetisation scheme more attractive.