Investors in the gold market may need to rethink their strategies as the Securities and Exchange Board of India (Sebi) Chairman, Tuhin Kanta Pandey, has expressed concerns over the Electronic Gold Receipts (EGRs) framework. He believes that the framework may need a review and is urging investors to deal only in regulated gold products.
EGRs were introduced to create a regulated market for gold trading and to position India as a global price discovery centre for the precious metal. However, the framework has not gained the desired traction so far. Pandey attributes this to several challenges, including GST issues.
Sebi is analysing the structural, operational, and regulatory challenges that have limited the adoption of EGRs. Meanwhile, Pandey is emphasizing the importance of regulated gold products, which include commodity derivatives, Gold ETFs, and EGRs. These products ensure investor protection and are a safer option for those looking to invest in gold.
Sebi has warned investors against digital or online platforms offering unregulated gold products, which can expose them to significant risks. These products are not notified as securities and are not regulated as commodity derivatives, operating outside the purview of Sebi.
Pandey believes that robust commodity derivatives markets are needed to manage price volatility and establish fair values that reflect future expectations. He also highlighted the need for transparency and market integrity in the commodity markets.
Remember, this is a perspective, not a prediction. Do your own research and consider your own risk tolerance before making any investment decisions.
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