BSE to deliver India standard gold and silver in F&O segment for the first time; India set to become price-setter of gold

The BSE has introduced a first-of-its-kind India standard gold and silver delivery, under the ‘futures and options’ (F&O) bullion contracts, reports Business Standard. This move could potentially elevate India’s status as a ‘price-setter’ for the metals. All exchanges with F&O trading in bullion are current offering LBMA -approved gold and silver for delivery

To facilitate the India standard delivery, the Bureau of Indian Standards (BIS) had, in January, notified standards for purity of gold and silver. All exchanges offering F&O contracts in bullion quote, at present, the London Bullion Markets Association (LBMA)-approved gold and silver for delivery. Only one Indian refinery qualifies for supplying LBMA gold; rest on bourses is imported.

Consequently, India stands as a ‘price taker’ in spite of being the largest consumer. The country’s annual consumption stands at 800-1,000 tonnes (gold), and 6,500-7,000 tonnes (silver). “With this step, the BSE wishes to highlight its commitment and priority towards development of the Indian bullion market. By conforming to its own good delivery standard, India could emerge as a price-setter, instead of a price-taker in bullion trade,” said Sameer Patil, chief business officer of the BSE.

Few other organisations had earlier tried to launch India standard delivery for gold and silver. However, traders sensed a trust deficit. To bridge the gap, however, the BSE has sought an undertaking from a number or Indian refineries. “We can start delivery as soon as from the current contract expiry, with no premium or discount to LBMA-approved bullion,” said Patil.

Meanwhile, gold price jumped to Rs 46,900 from Rs 46,4000 per 10 gram, while silver climbed to Rs 48,300 from Rs 47,400 per kilogram.  Gold jewellery prices vary across India — the second-largest consumer of the metal — due to excise duty, state taxes, and making charges. In a similar development, the BSE is set to launch ‘almond’ futures on its platform later this month.

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