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TMI BlogStandard Operating Guidelines for the Vault Managers and Depositories - Electronic Gold Receipts (EGR) segmentX X X X Extracts X X X X X X X X Extracts X X X X ..... nd extinguishment of EGR. The modalities for deposit of gold, creation of EGR, withdrawal of gold and extinguishment of EGR are stipulated in Annexure-2. 4. This circular shall come into force with immediate effect. 5. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 6. This circular is issued with the approval of the competent authority. 7. This circular is available on SEBI website www.sebi.gov.in under the category "Circulars" and "Info for Electronic Gold Receipts". Yours faithfully, Naveen Sharma General Manager Division of Market Policy Commodity Derivatives Market Regulation Department Email: [email protected] Ph.: 022-26441709 Annexure-1 The Standard Operating Guidelines for the Vault Managers and Depositories are as follows: 1. Financial Security Deposit (FSD) 1.1. Quantum 1.1.1. The Vault Manager shall furnish FSD of ₹ 10 lakhs to any one of the two Depositories (viz. NSDL or CDSL) before obtaining a certificate of registration from SEBI. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of six months period (from the date of cancellation of registration), FSD may be released as per the discretion of the Depository. 2. Corporate Governance 2.1. The Vault Manager shall designate one of its employees as a Compliance Officer who would be responsible for monitoring the compliance with relevant Acts, rules and regulations, notifications, guidelines and circulars issued by relevant authorities from time to time. The Compliance Officer would also be responsible for ensuring that all applicable norms are followed by the Vault Manager and should issue a declaration to that effect to the Depository for every quarter, within seven working days from the end of the quarter. 3. Infrastructure/safekeeping features 3.1. The Vault Manager shall ensure the following with respect to the recognized vaults: 3.1.1. The recognized vaults shall be under the absolute control of the Vault Manager. In case of a leased property, the Vault Manager shall hold a direct lease for at least three years and it shall be ensured that no third party including the owner/lessor of the recognized vault has any role to play in the operations of the said recognized vault. 3.1.2. The rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installed within the premises, fire escapes and fire hydrant points clearly marked. 3.2.17. Non-functioning items reported to Security and repaired /replaced immediately or as earliest as possible. 3.3. The Vault Manager shall put in place, necessary policies, control and system for dealing with the risks that may arise due to its businesses, other than EGR related business. 3.4. The Vault Manager shall have systems for real time tracking of gold, underlying EGR, starting from the time of deposits till the time of withdrawal of the underlying gold from the recognized vault. 3.5. The Vault Manager shall have systems for recovery and backup of data to prevent loss of electronic data. 3.6. The abovementioned norms are the minimum requirements which the Vault Managers are required to ensure for compliance by the recognized vaults. The Vault Manager may have additional requirements in place for running their operations related to EGR, without diluting the above minimum requirements. 4. Insurance 4.1. The Vault Manager shall take insurance, to fully cover the value of the gold stored in the recognized vaults, against all potential perils relevant to gold for which insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery charges and other related charges and disclose them on their website. The information about the same shall also be made available on the website of the Depositories. 6.1.2. In case the Vault Manager decides to revise any of its charges, it shall inform the market participants about the same before fifteen working days of the effective date of such revise charge. The Depositories, after receiving information regarding revision in charges from a Vault Manager, shall also intimate the revised charges of the said Vault Manager to all the existing clients. 6.2. Collection 6.2.1. The Vault Manager shall raise the invoice and collect the storage charges on a monthly basis from the Depositories. The Depositories shall, in turn, collect the storage charges from the beneficial owner at the end of the month or on sale of EGR or on withdrawal of gold by the beneficial owner, whichever is earlier. In case of inter-Depository transfer of EGRs due to sale of EGR, the storage charges shall be settled between the two Depositories on mutual understanding. The charges collected by the Depository for each month shall be credited to the account of the concerned Vault Manager within seven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard. In case of any adverse observations, it shall be rectified expeditiously. 8.3. Procedure for fire control 8.3.1. The Vault Manager shall ensure that its facilities and the deposits are well protected from losses due to fire hazards. 8.3.2. The Vault Manager shall ensure that addresses and telephone numbers of fire station, police station and designated officials of the Vault Manager are displayed at conspicuous places so that in case of emergency, the concerned authorities may be contacted without any delay. 8.3.3. To avoid any outbreak of fire in the premises, the Vault Manager shall ensure the following: 8.3.3.1. Smoking or lighting match-stick inside the vaults shall be strictly prohibited. 8.3.3.2. 'NO SMOKING' boards shall be prominently displayed. 8.3.3.3. Warehouse security shall ensure that no person entering in its premises carry any match box, gas lighter, chemicals and inflammable items which can cause fire. 8.3.3.4. The lighting and other arrangements in the vault premises shall be satisfactory and their periodical check-up shall be made to ensure that no electric line is defective. 8.3.3.5. Adequate fire extinguishers shall be there at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he request and provide services to the client at its own expense. 9.7. The Vault Manager shall submit a detailed report of the incident of loss/damage of the gold deposits with it against EGRs, to the Depositories. 10. Maintenance of records 10.1. The Vault Manager shall maintain the following records: 10.1.1. Documents for traceability of gold 10.1.2. Know your depositor (KYD) details 10.1.3. Certificate of indemnity from refiner/depositor and purity certificate. 10.1.4. Acknowledgment slip issued and received during the deposit and withdrawal respectively. 10.1.5. Purity, quantity and weight of deposited gold 10.1.6. Details of Creation and extinguishment of Electronic Gold Receipts 10.1.7. Details of the gold withdrawn 10.1.8. Details of movement of gold between recognized vaults or Vault Managers 10.1.9. All communications received or sent to the depositor/ authorized representative/beneficial owners 10.1.10. Details of complaints received and action taken thereof 10.1.11. Reports submitted to the Board. 10.1.12. Other documents related to transactions pertaining to EGR 10.2. The records shall be maintained in physical and/or electronic form for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investor with the accredited assayer, empanelled with the Clearing Corporation. 12.4.2.2. In such scenario where the gold is assayed, the Vault Manager shall ensure that the gold has not moved out of the vaulting system and may facilitate to the extent of transporting the gold to and fro the laboratory of the assayer accredited with the Clearing Corporation. 12.4.2.3. All the expenses related to assaying shall be incurred by the beneficial owner on whose complaint the assaying is being done. 12.4.2.4. If the report of the assayer certifies that the gold is not as per the specified quality, the stock exchange shall ensure that the concerned accredited refinery makes good for the loss to the beneficial owner. 12.4.3. Other complaints 12.4.3.1. All other complaints related to the operations of the Vault Manager shall be resolved by the Vault Manager within seven working days 12.4.3.2. The complaints related to the operations of the Depositories and DPs shall be resolved by the Depositories within seven working days. 12.5. The Vault Managers and Depositories shall ensure that the quality and quantity related complaints be redressed only if the gold has not moved out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iz. Vault Managers, Depositories, Stock Exchanges, Clearing Corporations and clients/investors. 1.2. The entities shall have limited access to the interface on need to know or user rights basis. 1.3. The Depositories shall have a Business Continuity Plan (BCP) and Disaster Recovery (DR) policy in place as defined in SEBI circular no. SEBI/HO/MRD1/DTCS/CIR/P/2021/33 dated March 22, 2021 so as to maintain data and transaction integrity and prevent data loss pertaining to the operation of the interface/EGR segment. Vault Managers: 1.4. The Depositories shall provide interface to the Vault Managers, registered with SEBI, by entering into an agreement with them defining their rights and obligations. The interface shall be accessed by the Vault Managers for creation and extinguishment of EGR, reconciliation of records and other related activities as defined by the Depository. 1.5. The Vault Mangers shall ensure that each of the recognized vaults has identified designate persons to access the interface to carry out the activities related to EGR. 1.6. The information of the identified designate persons shall be made accessible to the Depository as and when required. Depositor/B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.4.6. Packing list 2.1.4.7. Customs clearance documents 2.1.4.8. Letter of indemnity from the refinery/depositor specifying that they are responsible for the quality of the gold deposited by them. 2.1.5. During the deposit, the Vault Manager shall necessarily weigh the gold bars and verify/match the details of each of the gold bar, against the deposit request, with the packing list. 2.1.6. The Vault Manager shall accept deposits coming only through accredited refineries or nominated agencies as defined in the Vault Managers regulations. 2.1.7. On acceptance of the gold, the Vault Manager shall furnish a physical or electronic receipt to the depositor and/or its authorized representative. 2.1.8. Upon acceptance of the gold, the Vault Manager shall record the following details and create EGR from the interface: 2.1.8.1. Name of the Depository having account of Beneficial Owner; 2.1.8.2. Details of Depository Participant; 2.1.8.3. Name and address of the beneficial owner; 2.1.8.4. Valid mobile number and email id of the beneficial owner 2.1.8.5. PAN number of the Beneficial Owner 2.1.8.6. Demat Account details of the beneficial owner 2.1.8.7. Registration nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck exchanges. 3.1.5. Depository shall verify the documents submitted by the Beneficial Owner to the Vault Manager before crediting the EGR in the demat account of the concerned Beneficial Owner. 4. Withdrawal of Gold and Extinguishment of EGR 4.1. Procedure 4.1.1. The Depository shall allow the investor to place withdrawal request in the interface by selecting the choice of vault manager, recognized vault, quantity, ISIN and any other detail as prescribed by it. 4.1.2. The Depository shall approve the withdrawal request after satisfying the following: 4.1.2.1. The beneficial owner has the number of EGRs of the specified ISIN in his demat account representing the quantity of gold he desires to withdraw 4.1.2.2. The selected vault location has the quantity and withdrawable unit of gold requested for withdrawal 4.1.2.3. The beneficial owner has paid all the dues and charges 4.1.3. The Depository, after approving the withdrwal request, shall freeze the EGRs in the demat account of the BO against which withdrawal request has been placed and generate a withdrawal request letter. 4.1.4. The withdrawal request shall be active for three working days after which it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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