MUMBAI (Commodity Online): The regulatory tussle between equities regulator, Securities and Exchange Board of India (SEBI) and commodities markets regulator, Futures Market Commission (FMC) over the launch of futures and options trading in gold ETF has come to a halt as the NSE had deferred its decision to introduce this investment product.
FMC had raised objection to the SEBI's approval to an application filed by NSE to launch future and options (F&O) trading in gold ETFs on the regulatory grounds.
However, gold traders and experts in bullion trading are of the opinion that F&O trading in gold ETF would bring in larger volumes for the exchange and also benefit traders and retail investors. The rift between the regulators would only delay these benefits.
Speaking to CommodityOnline, Suresh Hundia, President, Bombay Bullion Association (BBA) mentioned that it is a regulatory tussle and has to be resolved with government intervention, but once resolved will yield benefits to traders as well as retail investors too. There are benefits of F&O in gold ETFs, not only to the traders but also to the retail investors in gold ETFs. Investors can pay a margin or they can simply gain from arbitration by investing in present F&O gold ETF and selling it in future, said Hundia.
Echoing the sentiments of Hundia, Prithviraj Kothari, MD, RiddiSiddhi Bullions Ltd told, F&O in gold ETF is a good investment product. This would not only benefit traders but also increase the retail participation too, which would result into increased volumes being generated at the exchange.
In a statement last week, BC Khatua, chairman, FMC had said that they (FMC) have written a letter to SEBI over legal issues including who will take the responsibility of regulating such a product (F&O in Gold BeES).
NSE was scheduled to launch F&O in Gold BeES, the ETF promoted by Benchmark Asset Management Company, from Friday.