Page 20 - Bullion world volume 4 issue 6 june 2024

Bullion World | Volume 4 | Issue 6 | June 2024

Finally, by granting access to a diverse range of its substantial mining output, exemplified by Grasberg's
participants, including traders, jewellers, brokers, production of approximately 55.90 tonnes of gold in the
banks, and financial institutions, IIBX fosters healthy calendar year 2021-22 alone.
competition, liquidity, and efficient price discovery. The following are the probable ways of maximizing
Overall, IIBX plays a pivotal role in advancing liquidity, the available opportunities in GIFT-IFSC through
transparency, and price discovery in bullion trading collaborations with the ASEAN region:
through its centralized marketplace, standardized a. Strategic Geographical Advantage: Leveraging
contracts, regulatory oversight, and inclusive market GIFT-IFSC for Bullion Trade Between Europe,
access. ASEAN, and India
Strategically, the GIFT-IFSC is geographically located
2. Participation of Indian banks in the development in between the Europe and the South East Asian
of the Precious Metals ecosystem at GIFT-IFSC – a region thereby enabling the movement and storage
transformative enabler by the Reserve Bank of of bullion from London/Zurich into GIFT or supply of
India bullion from the ASEAN region into GIFT. The Indian
markets being a major consumption center ensures
On February 9, 2024, the Reserve Bank of India the quicker and easier sales of the gold and silver
authorized Indian banks to participate in IIBX through through the IIBX, which may be subject to the good
two distinct avenues: Indian Banks' Units (IBUs) delivery norms and guidelines of the exchange.
could participate as Trading Clearing Members of the Such entities may participate on the exchange
exchange, while those Indian banks nominated by as a ‘Qualified Supplier’ subject to the guidelines
the RBI for importing gold and silver were permitted prescribed under the IFSCA Circular dated August
to participate as Special Category Clients (SCC). 18, 2022 and December 11, 2023 . Additionally,
This transformative enabler by the RBI is expected to considering the presence of leading international
encourage substantial institutional participation on the players in precious metals logistics such as Brinks
exchange. Global Services, Malca-Amit, and Sequel Logistics,
it would be prudent to explore the possibility of
It is anticipated that major foreign banks, nominated handling storage and custody services at GIFT-
banks, and other entities will gradually adopt the IFSC, offering proximity advantages over more
transparent and reputable exchange framework provided distant locations for the ASEAN region. Furthermore,
by IIBX, surpassing conventional bilateral models of considering that GIFT-IFSC is considered as a Free
bullion trading. Trade Zone, there are no duties or taxes leviable on
the gold and silver stored in GIFT-IFSC.
It may be also noted that resident entities exposed
to gold prices have been granted permission by the b. Developing Market Liquidity: Opportunities for
Reserve Bank of India on April 15, 2024, to hedge their ASEAN Entities in GIFT-IFSC Bullion Trade
gold price risk both on exchanges (IIBX and India INX), in Although the resident entities from India are now
IFSC and over the counter with any IFSC Unit, including permitted to mitigate their gold price risks through
International Banking Units (IBUs) of Indian or foreign exchanges or over-the-counter (OTC) platforms in
banks. GIFT-IFSC, there is an opportunity for participation
of market makers who may be active in the precious
GIFT-IFSC hosts 16 Indian bank branches and 11 metals space to make prices in GIFT-IFSC. Some
foreign banks, with some IBUs potentially evaluating potential market makers may be assessing the
to commence operations in precious metals over-the- trading volumes of exchange-traded or OTC
counter hedging / trading, as well as hedging / trading on products, while others might consider exploiting the
exchanges in IFSC. lack of liquidity by becoming the initial participants
in either the exchanges at GIFT-IFSC or the OTC
Establishing connects with ASEAN and GIFT-IFSC market. Entities based in ASEAN region can engage
in the Bullion Sector: Strategies and Approaches in importing, exporting or even re-exporting to and
The linkages between India and ASEAN is poised to from the GIFT IFSC zone, which is a Free Zone, thus
assume a significant geostrategic role in the context of facilitating the seamless movement of metals into
GIFT-IFSC. For instance, Singapore serves as a pivotal and out of GIFT-IFSC.
trading hub for over-the-counter (OTC) transactions in
precious metals, while Thailand boasts importance as a
center for scrap/recycled gold. Indonesia stands out for

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