Brief Overview:

IBUs are permitted to undertake OTC derivatives on Gold & Silver.

It can be offered to (specifically permitted) resident entities in India in compliance with the circulars issued by RBI.

Necessary amendments have been made to IFSCA Banking Handbook.

Technical Details:

Transactions on gold and silver need to be:-

1) Settled only on cash basis.

2) Only for hedging price risk.

IFSCA has also notified such transactions as ‘qualified financial contract’ under the Bilateral Netting of Qualified Financial Contracts Act, 2020.

JC takeaway:

These amendments have paved way for development of the commodity markets.   

For further details, please see:  

Permission to offer OTC derivatives on Gold and Silver

For any queries/clarifications, please feel free to ping us and we will be happy to chat