The National Stock Exchange (NSE) has directed its members, including stock brokers, to stop selling digital gold through its platform by September 10. NSE has taken this decision after SEBI said that some members are giving the facility to their customers to buy and sell digital gold through their platform.
SEBI, through a letter issued on August 3, had informed the exchange that such activity was in violation of the Securities Contracts (Regulation) Rules (SCRR), 1957. NSE members should stay away from such activities.
Explain that under the SCRR rules, all the members of the exchange should not trade anything other than securities and commodity derivatives. If they do, it will be a violation of the rules. Based on this rule, NSE has instructed its members to stop trading of digital gold on its platform.
TradeSmart Chairman Vijay Singhania It is said that digital gold units are not issued by any regulated organization. There is no way to check whether digital gold is supported by physical gold. Jewelery companies like Tit and some banks are known to sell digital gold. Digital gold does not come under the purview of securities under the Securities Contract (Regulations) Act 1956. That is why instructions have been given to stop its sale by the members.
Kishore Narne of Motilal Oswal Commodities Lets say that we used to sell digital gold products of MMTC-PAMP. We will no longer sell these products following a recent exchange directive. He further added that MMTC-PAMP will continue to be the owner of these products and will retain all holdings on behalf of the customers. MMTC-PAMP will provide redemption and sell-back facility to all the customers.
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