Proposed gold exchange to have its own good delivery norms

In a move that will set the stage for setting up a spot exchange for gold trading, help make gold trade transparent and eveolve an  India-based gold price, the government is considering formulating good delivery standards and responsible gold practices for trading in the precious metal. So far, in most trading centres across the globe, London Bullion Market Association or LBMA delivery standards are accepted. Even on Indian futures exchanges, it is the LBMA standard gold that is regarded as good delivery to the extent that gold refined by Indian refinery, but not having LBMA recognition, is not acceptable on MCX.

In India, only MMTC-PAMPS refinery has been recognised by LBMA. The government is discussing this issue with stakeholders in the bullion industry, including Indian Bullion Jewellers Association (IBJA), World Gold Council (WGC), Ficci, hallmarking and refinery associations and Indian Gold Policy Centre under IIM-A among others. As per the discussions held so far, a rough road map has been proposed for gold spot exchange, which will be refined further. Rajesh Khosla, MMTC-PAMPS said, "The good delivery draft has been modelled on international norms for precision and quality set by LBMA, on which there can be no compromise. The Indian elements in this draft deal with finance and production numbers that relate to the Indian environment. The quality standards proposed are global and there is no compromise on that." Future & Option Trading Tips

WGC is also preparing feasibility report for spot exchange for gold, which is likely to be out in a month or two. Under the draft norms, refineries will come under the ambit of the Indian good delivery standards proposed by IBJA, if they have four years of experience in refining metals, an annual refined production of 5 tonnes, and a tangible net worth of Rs 15 crore. Nifty Trading Tips

IBJA has also proposed specifications for good delivery bars, integrated responsible gold guidance proficiency testing and proactive monitoring and auditing procedures. Responsible norms include procedures to be followed for ensuring gold is not imported from conflict zones or areas where mining is either illegal or the revenue from mined gold is used for illegal or anti-social activities. Said Surendra Mehta, secretary IBJA, which prepared good delivery norms for gold along with all stakeholders: "Indian good gold delivery rules and responsible gold standards are key to the establishment of a gold spot exchange." IBJA put the draft on its website and has invited suggestions from stakeholders on the draft rules till August 14. Mehta added, "The rules for good delivery and responsible gold standards will also apply to silver." Comme its on this draft have also been invited from government, BIS, RBI and Sebi among others. Commodity Trading Tips