The Wealth Company, part of the Pantomath Group, has become the first asset management company to sign up, in principle, for the National Stock Exchange's (NSE) electronic gold receipts (EGRs), subject to the applicable regulatory guidance being made available.
The participation is intended to broaden the investor access to gold through institutional investment vehicles and contribute to the development of a deep and vibrant EGR ecosystem in India, as per an NSE release.
EGRs are exchange-traded instruments backed by physical gold of standardised purity and are stored in vaults accredited by the Securities and Exchange Board of India. These can be bought or sold through a demat account.
These gold receipts were launched by the NSE earlier this month, and live trading of these digital, physically-backed gold units began on Monday. "The participation of asset managers is central to building scale, depth and investor confidence in this segment…," said NSE Managing Director and CEO Ashish Kumar Chauhan.
What do experts say?
A few experts said higher cost of physical gold due to the recent hike in import duty may gradually drive volumes of EGRs, as investors, over time, may prefer easy liquidity, transparency, and lower transaction costs compared to physical ownership of gold. However, in the near-to-medium term, they are likely to prefer physical gold due to distrust towards digital formats and long-standing behavioural patterns.
Source: The Financial Express
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