The Securities and Exchange Board of India vide its notification dated 14th February 2022 has published the Standards Operating Guidelines for the vault manager & Depositories in order to ensure ease of compliance for the market participants in the EGR ecosystem.
As per Chapter IV of the Vault Managers Regulations, the Vault Managers are mandated for creation and extinguishment of EGR. The modalities for deposit of gold, creation of EGR, withdrawal of gold and extinguishment of EGR are notified under this Guidelines.
As per the guidelines, Vault Manager shall furnish Financial Security Deposit (FSD) of Rs. 10 lakhs to any one of the two Depositories(viz. NSDL or CDSL) before obtaining a certificate of registration from SEBI. This is the minimum amount of FSD which has to be maintained with Depository at all points of time.The FSD shall either be in the form of cash, fixed deposits or bank guarantees or any combination thereof without applying any haircut.
The Vault Manager shall designate one of its employees as a Compliance Officer who would be responsible for monitoring the compliance with relevant Acts, rules and regulations, notifications, guidelines and circulars issued by relevant authorities from time to time.
The Vault Manager shall put in place, necessary policies, control and system for dealing with the risks that may arise due to its businesses, other than EGR related business.
The procedure for Deposit of Gold, Creation of EGR, Withdrawal of gold and Extinguishment of EGR is as follows:
- The Depositories shall create and manage a common interface accessible to all the stakeholders in the Gold exchange ecosystem viz. Vault Managers, Depositories, Stock Exchanges, Clearing Corporations and clients/investors.
- The Depositories shall provide interface to the Vault Managers, registered with SEBI, by entering into an agreement with them defining their rights and obligations. The interface shall be accessed by the Vault Managers for creation and extinguishment of EGR, reconciliation of records and other related activities as defined by the Depository.
- Each Depository shall display relevant information related to EGRs to the other Depository in the interface for ease of reconciliation.
- The Vault Manager shall accept deposit of gold from 10:00 AM to 03:00 PM. For all the gold deposited till 03:00 PM, EGR shall be created on the same working day but made available for trading by the investor on the start of the next trading day.
