For the first time in the history of Indian commodity market, National Spot Exchange has launched a unique investment product in gold on its platform. It provides an opportunity for small investors to invest in gold in smaller denominations of 1 gram and multiple thereof in demat form.
The segment, which is similar in functionality to the cash segment in equities, offers commodities in the demat form in smaller denominations (e.g. 1, 2 3…… gms). Powered by its unique features, E-GOLD is poised to become a household name across the country with millions of investors opening their demat account to participate in this spectacular instrument.
The product is designed to reach the masses across the country. Investors can now trade and invest in gold just like shares. This product is equally suitable for retail investors of equity market and house hold. The clearing and settlement pay-in and pay-out are based on T+2 cycles.
Hitherto the exposure of commodities market participants in India has been limited to commodity futures contract, physical commodity and ETF Gold. NSEL came with the objective to develop a convenient and cost effective platform for buying and selling physical gold by providing an option of holding gold electronically (in Demat account). It will reduce the cost associated with holding physical gold (cost of lockers & insurance costs) and will offer a transparent price structure for retail investors. It will attract a new segment of “savvy” investors who have refrained from investing in gold for want of a cost efficient seamless platform.
Exchange has empanelled Depository participants which includes Globe, Religare, Karvy, Goldmine, IL&FS, Monarch, SMC, SSD, SHCIL, Alankit, Zuari, LSE, Geojit BNP Paribas, Master Capital, India Infoline and Aditya Birla.. An individual interested in trading in E-GOLD will have to open beneficiary and a trading account with any of the empanelled DPs. In case the unit holder is interested to take physical delivery of gold bar/ coin, against his E-GOLD units, he can surrender such units to the Exchange and get physical delivery at any point of time at his discretion. Initially, delivery of physical gold will be made available at Ahmadabad, Mumbai and Delhi. The Exchange is in process of expanding the number of centers in future to offer physical delivery. If a client opts for physical delivery, he can get the same from any center of his choice out of such specified centers.
The main advantages of NSEL E-Gold are transparent pricing, seamless trading, easy entry and exit, lower holding cost and pan India accessibility. Investors can invest in E GOLD without worry for daily MTM pay in/payout and roll over issues as applicable in derivative market. Liquidity, i.e. any time buying and selling of commodity is possible with hassle free low cost transaction in physical commodity. There is no risk of commodity custody/theft. The storage charges of holding gold in demat form is Rs.0.60 per unit/month.
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