Stories
SEBI to Tighten Vault Rules for Gold, Silver ETFs: Enhanced Security for Investors
- •SEBI is set to strengthen rules for vaults storing gold and silver backing ETFs, aiming for greater security and consistency.
- •The new proposals include increasing the minimum net worth for vault managers from Rs 50 crore to Rs 75 crore to boost financial capacity.
- •Vault security scope will expand to cover risks like fire, fraud, terrorism, and cyber-attacks, in addition to theft and burglary.
- •Bullion will be stored separately based on financial products and entities, improving identification and reconciliation.
- •While ETF buying/selling remains unchanged, these rules enhance security, record-keeping, and insurance of physical bullion, though investment risks like price fluctuations persist.
Key Questions Answered
SEBI has proposed increasing the minimum net worth requirement for vault managers from Rs 50 crore to Rs 75 crore. The regulatory overhaul also expands the scope of vault security rules to cover additional risks like fire, fraud, terrorism, and cyber-attacks, while ensuring bullion is stored separately based on products and entities.
The changes will not directly affect the standard process of buying or selling ETF units through stock exchanges. Instead, the rules aim to strengthen the physical security, insurance, record-keeping, and periodic reconciliation of the underlying gold and silver backing the ETFs.
Introduced in 2021, the Vault Managers Regulations originally applied strictly to vault managers handling physical gold underlying Electronic Gold Receipts (EGRs). Vault rules for gold and silver held in ETFs and other bullion products were previously non-uniform and operated outside those specific guidelines.
