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Sebi approves framework for social stock and gold exchanges

The board of Securities and Exchange Board of India (Sebi) has on Tuesday approved frameworks for the gold and social stock exchanges.
 
"The instrument representing gold will be called 'Electronic Gold Receipt' (EGR) and will be notified as "securities" under Securities Contracts (Regulation) Acy, 1956," the market regulator said in a press release.
 
The EGRs will have trading, clearing as well as settlement features akin to any other securities and any recognised stock exchange can launch trading in EGRs in a separate segment.
 
The denomination for the trading of EGR and conversion of EGR into gold can be decided by the recognised stock exchanges with the approval of Sebi, while the clearing corporation will settle the trades executed on the stock exchanges by way of transferring EGRs and funds to the buyer and seller respectively.

Sebi said the gold exchange, encompassing the entire ecosystem of trading of EGR and physical delivery of gold, is expected to create a vibrant gold ecosystem in India commensurate with India's large share of global gold consumption. "The gold exchange  would be a national platform for buying and selling EGRs with underlying standardised gold in India and also create a national pricing structure for gold."
 
On social stock exchange (SSE), which will be used for fund raising by social enterprises, Sebi said the enterprises eligible to  participate in SSE will be  entities (non-profit organisation (NPO) and for-profit social enterprise (FPE)) having social intent and impact as their primary goals.
 
"Social Enterprises will have to  engage  in  a  social  activity out  of  the  list  of  15  broad  eligible  social activities approved by the board," it said.
 
The NPOs which want to raise funds on SSE will be required to be registered with the SSE. The eligible organisations can raise funds through equity, zero coupon zero principal (ZCZP) bonds, mutual funds, social impact funds, and development impact bonds.

The market regulator said it will make suitable  amendments to its regulatory  framework towards mandating initial and continuous  disclosures for social enterprises, covering aspects relating to governance, financial and social impact.
 
In a press conference after the board meeting, Sebi Chairman Ajay Tyagi said he cannot specify the timeline for the exchange, and that he will coordinate with the government to take it ahead.
 
The Sebi board also cleared a proposal to amend de-listing framework after an open offer. It also approved amendment to SEBI (Mutual Funds) Regulations, 1996 to enable introduction of silver exchange traded funds with certain safeguards, in line with the existing regulatory mechanism for gold ETFs.

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