Multi Commodity Exchange of India (MCX) has signed a memorandum of understanding with India Bullion and Jewellers’ Association to study the viability of jointly setting up a bullion spot exchange as and when the policy is announced by the Government. This development is in line with the Government of India’s vision of establishing trade-efficient and consumer-friendly system of regulated gold exchange in the country for bullion stakeholders for efficient price discovery and transparency.
Gold Spot Exchange, once set up, would help considerably in creating a vibrant gold ecosystem corresponding to India’s annual demand of around 800-900 tonnes. It would further lead to assurance in the quality of gold, provide for a robust settlement mechanism, multiple delivery centres, active retail participation, greater integration with financial markets, and boost recycling. It would also give a fillip to the gold monetization efforts of the Govt. through transparency and standardization of the gold market.
Both MCX and IBJA have been continuously working towards furthering the development of bullion and jewellery sectors in India. Mrugank Paranjape, MD & CEO, MCX said, “MCX and IBJA have worked jointly with missionary zeal for creating awareness on risk management and regulatory compliances among bullion traders and jewellers. This encourages jewellers to choose organized ways of working.”
“In continuation to this, MCX and IBJA have entered an MoU to explore collaboration in setting up a Bullion Spot Exchange in India, in line with the Govt.’s vision of a Regulated Spot platform”, he added.
By virtue of this MoU, the entities would also undertake a series of initiatives such as organizing joint seminars and awareness programmes on price risk management for bullion traders and jewellers across the country. These awareness programs would serve to wean away the small- and medium-sized jewellers from unorganized markets, while educating them about the effective hedging tools such as gold derivative contracts—Futures & Options that will enable jewellers to maintain efficient risk management books of account. Moreover, the entities would facilitate measures to deepen commodity derivatives market and encourage the participation of corporates/firms including SMEs on commodity exchanges to manage their commodity price risk.