Sebi Offers Electronic Gold Receipt Trading Features

Capital markets regulator Sebi on Monday released electronic gold receipt (EGR) trading features on exchanges.

According to the guidelines, trading on the EGR segment will be permitted Monday through Friday and exchanges may set their trading hours within the timeframe of 9:00 a.m. to 11:30 p.m./11:55 p.m., Sebi said in a circular.

In order to clarify the details of various aspects of EGR trading on the exchange, Sebi has issued guidelines on trading hours, transaction fees by exchanges, pre-open call auctions, block trades and in bulk, price ranges, unique client code, investor protection fund and investor service fund.

Regarding transaction fees, Sebi said exchanges will need to ensure that transaction fees on trades executed for EGR on their trading platform are fair and in the interests of investors.

In order to ensure orderly trading and to protect market integrity, exchanges have been instructed to implement a price band mechanism in the EGR segment to prevent the acceptance of execution orders that are passed to the beyond the price limit they have set.

“The initial price limit of the price range is set at 10% of the previous closing price. If the market moves in one direction or the other, the dynamic price ranges are relaxed by the exchanges in increments of 5%. “, Sebi said.

Considering that EGR is a new security class, Sebi said that building up liquidity in this segment might take time, it was decided to allow a block transaction window. The window will operate between 3:05 p.m. and 3:20 p.m. and the minimum order size for executing trades will be Rs 10 crore.

EGR bought or sold representing 5% of the market-wide limit will constitute a wholesale transaction.

Explaining the frame of call bidding in the pre-open session, Sebi said that the pre-open session will last 15 minutes from 8:45 a.m. to 9:00 a.m., of which 8 minutes will be allowed for order entry, order modification. and order cancellation, 4 minutes for order matching and trade confirmation and the remaining 3 minutes will be the buffer period to facilitate the transition from the pre-opened session to the normal market.

The session will randomly close during the last minute of order entry – anytime between the 7th and 8th minute of order entry. Such random closing will be driven by the system.

For transactions in the EGR segment, it will be mandatory for members to have a unique client code (UCC) for all their clients trading on the exchange, Sebi said.

The exchanges will not allow trades to be executed without the uploading of UCC details by members of the exchange, he added.

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