Page 34 - Bullion World Volume 03 Issue 07 July 2022

Bullion World | Volume 2 | Issue 07 | July 2022

Implementation of IGDS to boost

organized gold scrap market

instead of futures prices. This innovative framework led
the deepening and expansion of the bullion derivatives
markets in India by permitted participants to give or take
delivery of the underlying without getting into the futures
contract at the time of expiry.

This enabled exchanges to launch innovative 'options'
products by enabling the rollout of 'options-in-goods'
contracts but also paved the way for further integration
of the spot market with the derivatives market. On 1
June 2020, BSE launched India's first 'options in goods'
contracts on gold and silver, a contract which offered
superior flexibility and a cost-efficient hedge than
any comparable product in Indian markets as there is
no obligation on the part of the buyer to buy/sell the
underlying. These enabled market participants to not
only hedge their price risk but also avail delivery on
Mr Sameer Patil expiry of the contract, benefitting the entire spectrum
Chief Business Officer, BSE Ltd from jewellers, dealers, and traders.
It has been more than 2 years, since BSE launched
Can you brief about Options in Goods contract and Options in Goods contracts and they have been
its relevance to bullion trade in the exchange? extremely beneficial and cost efficient for Jewellers,
bullion dealers and other physical market participants as
Since the inception of commodity derivatives trading in
it empowers them to not only hedge their price risk but
India, i.e., from 2003 onwards, all trading was focused
also avail delivery on expiry of the contract.
on futures or options that devolved in futures. Innovative
products were need of the hour to widen and deepen
the commodity derivatives markets.

BSE commenced trading in the same set of contracts
that were available, but our focus was that of overall
transformation. On the suggestion of BSE, a working
group to study the introduction of new commodity
derivative products as formed by SEBI. BSE, now
designated as the lead coordinator of the working group,
sought to deepen the commodity ecosystem in India and
the recommendation to the benefit of small and medium
sized jewellers, traders, bullion dealers in the gold
ecosystem was implemented.

This led to the introduction of the necessary framework
to introduce ‘options on spot’ prices of commodities

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