Bullion dealer to start gold trading on Internet in India


By Suresh P. Iyengar
The Hindu, Chennai, India
Wednesday, November 21, 2007


MUMBAI, India -- RiddhiSiddhi Bullions Ltd (RSBL), one of the largest bullion dealers in India, is set to launch online bullion spot trading.

The initiative will be done through a newly floated company, RiddhiSiddhi SPOT (Spot Precious-metals Online Trading) Ltd.

"We have already started demo trading and the venture will go live in the next 10 to 20 days. The company has invested about $1 million in the new initiative," said Mr Prithviraj Kothari, Director, RiddhiSiddhi Bullions Ltd, which is an "authorised participant" (AP) in all gold exchange traded funds (ETF) in India. AP provides guaranteed liquidity for ETFs.

To begin with, trading can be done at Mumbai, Ahmedabad, and Hyderabad, where delivery centres have been established.

By April 1, Chennai, Coimbatore, Bangalore, Mangalore, Delhi, and Indore can also log on to the platform, when delivery centres will be in place there.

"We have received membership from 250 jewellers all over India. Broking firms have also shown interest. We expect to have 6,000 members within a year of operations," Mr Kothari said.

RSBL registered a turnover of Rs 2,340 crore in 2006-07.

Members have to deposit Rs 1 lakh and will be allowed to take position up to 2 kg. The trading unit for gold would be 1 kg and 30 kg for silver.

Trading will be on T+2 cycle (at the end of third day positions have to be squared off by giving or taking delivery) and will become T+7 at a later stage.

The RBI has already allowed trading up to T+11. Trading will be open from 10 a.m. to 9 p.m. The terminal will display gold rates 24 hours.

Typically a trading terminal will display London Metal Exchange quotes and the equivalent conversion relevant to the particular trading centre.

Price limits on both buy and sell side can be preset by the traders.

Deliveries will be of London Bullion Market Association and RBI-approved gold and silver bars.

"RiddhiSiddhi move will bring in a much needed transparency in spot price discovery. Jewellers can also take advantage of price difference in various states (due to different state taxes) if it can take delivery in that particular state where taxes are low," said Mr Vijay Trivedi, Associate Vice-President, Commodity Research.

RiddhiSiddhi has roped in Axis Bank and Union Bank of India as clearing agents for the trading, according to Mr Kothari.

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