India’s First International Bullion Exchange. How Much Does It Attract Investors?

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The PM of India laid the foundation stone of the IFSCA Headquarters building in Gujarat International Finance Tec-City (GIFT City) in July 2022, launching the India International Bullion Exchange (IIBX), which has come with MoU to NSE IFSC-SGX connecting all associated partners. The Holding Company approved the IFSCA application for setting up the International Bullion Exchange through the subsidiary of the holding company.

PM Modi Unveils India’s 1st International Bullion Exchange | India Business Hour | Business News | CNBC-TV18

The Prime Minister launched NSE IFSC-SGX Connect. Under this Connect, all orders on NIFTY derivatives placed by members of Singapore Exchange Limited (SGX) will be routed to & matched on the NSE-IFSC order matching and trading platform. 

The term for high purity physical forms of silver and gold that are frequently stored as bars, ingots, or coins is called Bullion. Institutional investors or central banks frequently keep it as reserves, and it is occasionally regarded as legal cash. Buyers and sellers can trade gold, silver, and related derivatives in the name of ‘The Bullion Exchange Market.’

The Ministry of Finance said in 2021, ‘The International Bullion Exchange shall be the “Bullion’s gateway Imports into India,” wherein all the bullion imports for domestic consumption shall be canalized through the exchange’ when Government had taken steps to notify bullion spot trading and bullion depository receipts with underlying Bullion as financial products and bullion-related services as financial services. They further added that the exchange ecosystem is anticipated to unite all market players to one transparent platform for trading bullion, guarantee the purity of the metal, promote better interaction with other financial market segments & support India’s position as the world’s preeminent trading hub.

In addition to advancing the gold financialization in India, IIBX will promote effective price discovery with the assurance of ethical sourcing & quality. This would enable India to reclaim its proper position in the world bullion market & provide trustworthy & high-quality services to the global value chain. Additionally, this reaffirms the Government of India’s commitment to giving India the ability to have an impact on world bullion prices as a principal consumer.

“The prime minister introduced NSE IFSC-SGX Connect” in July 2022. Under this, the NSE-IFSC order matching and trading platform will be used for matching all orders on NIFTY derivatives placed by members of SGX (Singapore Exchange Limited). It will increase derivative market liquidity at GIFT-IFSC, attracting more foreign investors and having a favorable effect on the financial ecosystem there. It is anticipated that many broker-dealers from India and other foreign countries would use this Connect to trade derivatives.

This exchange will facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialization of gold in India, a statement by the IFSC Authority said.

The objective behind this setting is to enable the trading of commodities on an exchange. As an international exchange, trading can also take place in US dollars. In Asia, this would help position India as one of the biggest trading hubs. International players will be happy to use India’s vaulting services as they will be free of duty charges because of the competitive pricing on IIBX.

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