India International Bullion Exchange IFSC Ltd (IIBX)
Why was there a need to establish IIBX ?
- India is the world’s second largest gold consumer. India imports approx. 842.28 tonnes of gold every year and this number is rising every year. Giving a major boost to India’s aspiration of having its own International Bullion Exchange and paving the way for India to play a larger role in the global bullion market, India International Bullion Exchange IFSC Limited (IIBX) was launched by the Honourable Prime Minister of India, Shri Narendra Modi on 29th of July 2022. IIBX is promoted by India’s leading market infrastructure institutions like NSE, INDIA INX (subsidiary of BSE), NSDL, CDSL and MCX. IIBX is established at GIFT IFSC, Gandhinagar, Gujarat, India. IIBX is regulated by International Financial Services Centres Authority (IFSCA).
- Currently, gold is sold in India’s bullion market at the price set by the London Bullion Market Association (LBMA). With the launch of IIBX in Gujarat International Finance Tec City (GIFT), gold prices in India will no longer fluctuate due to international speculators.
- IIBX has been conceptualised to provide a gateway to import bullion into India and provide world class bullion exchange ecosystem to promote bullion trading, investment in bullion financial products and vaulting facilities in IFSCs.
- The government intends to elevate this exchange to the level of the Shanghai Gold Exchange and Istanbul’s Borsa Gold Exchange.
- For the first time, an Indian resident Jeweller (Qualified Jeweller – QJ) can import bullion directly into India through IIBX by being a Client or a Limited Purpose Trading Member of IIBX. Top bullion dealers and jewellers of India have been on boarded by IIBX with many more applications in the pipeline
Membership Categories:
Trading Member (TM) |
This category of membership entitles a member to execute trades on his own account as well as on account of his clients but, clearing and settlement of trades executed through the Trading Member would have to be done through a Clearing Member. |
Limited Purpose Trading Member (LPTM) |
A Qualified Jeweller based in India and not having a physical presence in IFSC, may apply for a limited purpose trading membership, wherein the entity can only trade on its own account (proprietary trading). No client onboarding shall be permitted for such a trading member. |
Trading Cum Self Clearing Member (TSM) |
This category of membership entitles a member to execute trades and to clear and settle the trades executed on his own account as well as on account of his clients. |
Trading Cum Clearing Member (TCM) |
This category of membership entitles a member to execute trades on his own account as well as on account of his clients and to clear and settle trades executed by themselves as well as by other trading members who choose to use clearing services of the member. |
Professional Clearing Member (PCM) |
A member only clears and settles trades of trading members of the Exchange who choose to clear and settle their trades through the Member. |
Qualified Jewellers:
- The entities fulfilling the following conditions shall be considered as ‘Qualified Jewellers’ and shall be permitted to transact as trading members / clients of trading members, on IIBX, for the purpose of import of gold under the above-mentioned ITC(HS) codes:
- The entity shall be engaged in the business of goods falling under ITS(HS) codes 7108, 7113, 7114 and 7118 under Chapter 71 of ITC(HS);
- The entity must have filed due GST returns up to the preceding month prior to making an application to the IIBX. Further, a certificate should be submitted by the entity, duly attested by a practicing chartered accountant or a practicing cost accountant or a practicing company secretary, stating that 90% of the average annual turnover in the last 3 financial years are through dealing in goods under precious metals; and
- The entity shall have a minimum net worth of ₹ 25 crore as per its latest audited financial statement.
Net worth:
- “Net Worth” means the aggregate value of the paid-up share capital (or capital contribution) and all reserves created out of the profits, securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation.
- The entity shall provide the net worth certificate from a practicing chartered accountant or a practicing cost accountant or a practicing company secretary.
- The net worth specified above shall be maintained by the entity at all times
Net worth requirement for initial 6 months from the date of operationalization of IIBX shall be as under:
|
Sr no |
Category |
Net worth |
|
|
Entities incorporated in India (including IFSC) |
Foreign Entities |
||
|
1 |
Trading member
|
Min. USD 1,35,000 |
|
|
2 |
Trading and Self- Clearing Member |
Min. USD 6,75,000 |
|
|
3 |
Trading and Clearing member |
Min. USD 13,50,000 |
|
|
4 |
Professional Clearing Member |
Min. USD 13,50,000 |
|
Base Minimum Capital Requirement (BMC):
- The BMC for initial 6 months from the date of operationalization of IIBX shall be as under
- For entities incorporated in India (including IFSC)
|
Types |
Amount |
|
|
Only trading |
1,500 |
|
|
Trading |
2,500 |
|
|
Proprietary |
40,000 |
|
|
All |
75,000 |
- For foreign entities the BMC shall be minimum of USD 75,000 as prescribed by IFSCA
Process to be followed for notification as a Qualified Jeweller
01. Qualified jeweller:
Can either participate as a client of bullion trading member or llimited purpose trading member.
02. Submit application:
Submit duly filed application to IIBX
03. Scrutiny:
IIBX shall scrutinize the application
04.farward application:
IIBX shall forward the application and related documents to IIBX with its recommendation
Process of import of Gold by a Qualified Jeweller through IIBX
Mode of participation by Qualified Jeweller on IIBX:
- Qualified Jeweller is being permitted to purchase Bullion Depository Receipt (BDR) on IIBX -only for import of gold, either as a client of a Bullion Trading Member or as a LPTM.
- A Qualified Jeweller participating as client may approach a Bullion Trading Member for opening a client account for the purpose of buying BDR for importing gold.
- A Qualified Jeweller participating as LPTM shall be treated as a client that is permitted to directly access the IIBX trading system. A LPTM shall not be considered as a Trading Member or intermediary on IIBX.
- A Qualified Jeweller participating as LPTM shall have to associate itself with a clearing member for clearing of its purchase transactions, in the manner specified by IIBX.
- The responsibility of surveillance of the Bullion ecosystem in IFSC shall be with IIBX.
Advance remittance for purchase of BDR on IIBX for import of gold:
- IIBX shall put in place necessary systems for issuance of an IIBX authenticated document carrying details of indicative price of gold for the quantity and the quality (purity), intended to be imported by the Qualified Jeweller through IIBX. This document shall be the basis on which Authorised Dealer (AD) bank may allow Qualified Jewellers to remit advance payments towards import of gold through IIBX in terms of the para 3(i) RBI circular, RBI/2022-2023/57/A.P(DIR Series) Circular No.04 dated May 25, 2022.
- The Qualified Jewellers shall remit foreign currency through its AD bank in India, in the manner specified by IIBX for the purchase of BDR, only for the purpose of importing gold.
Purchase of BDR for import of gold:
- The Qualified Jewellers shall only be permitted to purchase BDR on IIBX towards import of gold and shall not in any manner be permitted to enter a sell order or cancel the purchase order.
- IIBX shall ensure that the statement of accounts is issued by the Bullion Trading Members / Bullion Clearing Members, as the case may be, to each Qualified Jeweller, and the same are reconciled on a daily basis.
- Any unutilised amount as at the end of the specified time limit of 11 (calendar) days from the date of remittance, shall be compulsorily remitted back to the AD bank in India, from where the remittance was received, for reconciliation of the Outward Remittance Message (ORM) and Bill of Entry (BOE) in terms of RBI Circular, RBI/2022- 2023/57/A.P(DIR Series) Circular No.04 dated May 25, 2022.
- The IFSC Banking Units (IBUs), acting as Clearing Banks authorised by IIBX, for the purpose, shall get the remittance with a unique client code for each Qualified Jeweller in the designated accounts
Movement of Gold from IFSC for import to India – Domestic Tariff Area:
IIBX shall issue necessary instructions to the Bullion Depository, which in coordination with the vault manager registered with IFSCA, shall ensure that the BDR purchased by Qualified Jeweller is extinguished and the Bill of Entry is filed before the expiry of 11 (calendar) day period.
IIBX may specify detailed Standard Operating Procedures / Guidelines / Circulars etc. in this regard, for the relevant stakeholders and participants on IIBX
Periodic Reporting:
IIBX shall submit a report to IFSCA, on a monthly basis, providing details relating to transaction in bullion by Qualified Jewellers, including details of products traded, quantity, value, quantity of gold imported, etc.
What benefit does IIBX offers to Jewellers ?
- Indian jewellers and exporters will not have to wait for the London Bullion Market Association to set the price of gold
- Currently, jewellery exporters and large domestic jewellers cannot import gold directly. They must import gold through a bank and an authorised agency. The bank charges both the gold exporter and the importer for this import. This type of fee is now exempt. Registered IIBX jewellers will be able to purchase gold directly from the seller. The price of gold will fall as a result of this
- Reduction in cost of import – The London Exchange opens gold rates per ounce. Then there’s the gold import duty and a bank fee of about $2 per ounce. The bank charges this fee in the name of currency conversion and other service fees.
- Dependency on Bank will reduce
Fee Structure:
|
Type of |
Application Processing For Grandfather Category |
Application Processing For Category |
Annual Fees |
IFSCA |
||
|
Exchange |
Clearing Corp. (IIBX) |
Reg. Fees |
Annual Clearing Members hip fee |
|||
|
Trading |
500 |
1000 |
3000 |
– |
1000 |
– |
|
Trading & Member |
500 |
1000 |
3000 |
10000 |
1000 |
1000 |
|
Trading & Clearing Member |
500 |
1000 |
3000 |
10000 |
1000 |
1000 |
|
Professional Clearing Member |
500 |
1000 |
– |
10000 |
1000 |
1000 |
|
Limited Trading Member |
500 |
1000 |
3000 |
– |
** |
– |
**IFSCA fees for Qualified Jewellers as LPTM shall be levied as and when applicable.
|
Qualified Jewellers |
Application Processing Fees for Qualified Jewellers |
Annual Membership Fees for Qualified Jewellers |
|
Qualified Jewellers (Client) |
1000 |
1500 |
