State Bank of India (SBI) has become the first bank to become a trading-cum-clearing member (TCM) at the India International Bullion Exchange (IIBX).
IIBX Membership Key Points
- In the backdrop of Reserve Bank of India (RBI) guidelines, Indian bank branches in GIFT IFSC have been permitted to function as Trading Members (TM/TCM) of IIBX.
- The Reserve Bank of India has also allowed Special Category Clients (SCC) to import gold through IIBX, which are nominated banks in India.
IIBX
- IIBX is India’s first international bullion exchange. It was launched at the GIFT International Financial Services Center (IFSC) in Gujarat on July 29, 2022.
- IIBX offers a diverse portfolio of products and technology services at low cost that is more competitive than Indian exchanges as well as other global exchanges in Hong Kong, Singapore, Dubai, London and New York.
- All contracts, trades and settlements listed on IIBX are in US dollars.
- Bullion in IIBX is held in vaults authorized by the International Financial Services Centers Authority (IFSC) and listed by India International Depository IFSC Limited (IIDI).
- Bullion is traded on IIBX in the form of Bullion Depository Receipts (BDRs). To deposit BDR it is necessary to open a demat account with IIDI.
What is bullion
- Bullion refers to physical gold and silver of high purity (officially at least 99.5% to 99.9% purity). It is often kept in the form of bars, ingots or coins.
- Bullion can sometimes be considered legal tender and is held by central banks as reserves.
- It is used by institutional investors to protect against the effects of inflation on their portfolios.
- Investing in gold and silver bullion can be easily accomplished through exchange-traded funds (ETFs) or futures contracts.
IIBX membership categories
- Trading Member (TM): In this category a member has the right to trade on his own account as well as on the account of his clients but the clearing and settlement of trades executed through the trading member is done through a clearing member. Will have to do.
- Trading cum Self Clearing Member (TSM): A member in this category has the authority to execute trades and clear and settle trades executed on his own account as well as his clients’ accounts.
- Trading-cum-Clearing Member (TCM): This category allows a member to execute trades on his own account as well as his clients’ account and clear and settle the trades executed by himself as well as other trading members. Have the right to choose to use the member’s clearing services.
- Professional Clearing Member (PCM): A member clears and settles trades only for those trading members of the exchange who choose to clear and settle their trades through the member.
Effects of SBI’s IIBX TCM Membership
- Enabling the IFSC Banking Unit (IBU) of SBI to transact trades on the IIBX platform and settle them on behalf of its customers.
- Helpful in promoting gold and silver trading on IIBX.
- The entry of India’s largest bank into the sector in the form of TCM is expected to boost trading volumes in IIBX.
- Marking the beginning of transparency, efficiency and accessibility in the bullion trading market.
- Strengthening SBI’s commitment to innovation and excellence in the financial sector.
GIFT IFSC
- GIFT International Financial Services Center (GIFT IFSC) is a financial center and special economic zone (SEZ) in Gujarat International Finance Tech (GIFT) City.
- Established in April 2015, the sector aims to provide services for financial institutions and companies operating in sectors such as banking, insurance, capital markets and asset management.
- GIFT IFSC is regulated by the International Financial Services Center Authority (IFSCA), the exclusive independent regulator for the sector.
- GIFT City is a joint venture between the Government of Gujarat and Indian infrastructure development and finance company IL&FS.