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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 ..... ions, the Vault Managers are mandated for creation and 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Depository, whichever is later. In case all claims, if any, outstanding against a Vault Manager are settled before the 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and unarmed security personnel at the vaulting premises. The armed guard shall have an active and a valid gun license. 3.2.16. Fire-fighting equipments 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Information Technology Act, 2000 or rules framed thereunder. 6. Storage and other related charges 6.1. Levy 6.1.1. The Vault Managers shall determine storage charges, delivery 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event of any unlawful entry, burglary, theft or damage or potential loss of the gold deposited. 8.2.4. The Vault Manager shall ensure daily check of Security and Surveillance system and maintain records in this 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posits and withdrawals from the said vault till the restoration of infrastructure and systems in the concerned vault. 9.6. In case the recognized vault receives any deposit or withdrawal request in the intervening period, the vault shall not dismiss the 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/benefici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failing which, the operations of the EGR segment of the concerned recognized vault shall be ceased, till the complaint is resolved. 12.4.2. Quality related complaints 12.4.2.1. The complaints pertaining to the quality/purity of gold (deposited by accredited refinery) shall be taken up by the 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ^ Average resolution time is the sum total of time taken to resolve each complaint in the current month divided by total number of complaints resolved in the current month. Month wise data for the financial year S. No. Month Carried forward from previous month Received Resolved Pending 1 2 3 4 5 6 1 April 2 May 3 Grand total 13. Disclosures by the Vault Manager and Depository 13.1. The Vault Manager shall disclose the following information on their website: 13.1.1. Details about the recognized vaults including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure display of outstanding storage and other charges to the depositor/beneficial owner of EGR. Stock Exchanges and Clearing Corporations: 1.9. The Depository shall provide user access, in the interface, to the Stock exchanges (SEs) and Clearing Corporations (CCs) and ensure that the following information is available to SEs and CCs for ease of reconciliation between Depositories, SEs and CCs: 1.9.1. Number of EGRs in the system - total and ISIN-wise 1.9.2. New EGRs created for trading - total and ISIN-wise 1.9.3. EGRs extinguished on the trading day- total ISIN-wise 1.9.4. Any other information required by the entities Depository: 1.10. Each Depository shall display relevant information related to EGRs to the other Depository in the interface for ease of reconciliation. 2. Deposit of Gold and creation of EGR 2.1. Procedure 2.1.1. The Depository shall allow the depositor to place deposit request in the interface by selecting the details such as Vault Manager, recognized vault, quantity to be deposited, the purity and weight of the gold to be deposited and details of authorized representative. The Depository may specify additional detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt; 2.1.8.10. Deposit/Withdrawal unit 2.1.8.11. Trading unit 2.1.8.12. Purity 2.1.8.13. Bar number; 2.1.8.14. Rates of storage charges and other related charges, if any; and 2.1.8.15. Name of the refiner. 2.1.9. The Vault Manager shall also upload a copy of the purity certificate in the interface during creation of EGR. 2.2. Cut-off time 2.2.1. The Vault Manager shall accept deposit of gold from 10:00 AM to 03:00 PM. 2.2.2. For all the gold deposited till 03:00 PM, EGR shall be created on the same working day but made available for trading by the investor on the start of the next trading day. 2.2.3. For the gold deposited after 03:00 PM, EGR shall be made available for trading on the second working day of such deposit. 2.3. Procedure to deal with errors in recording data 2.3.1. In the case of any inconsistency/error in recording data in the system committed by the Vault Manager during creation of EGR, the Vault Manager shall ensure that such errors are detected before or during reconciliation at the end of the day. As a corrective measure, the Vault manager shall immediately make a representation to the Depository for rectification. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive, the quantity requested for withdrawal and the unit of withdrawal shall be immediately transmitted to the concerned Vault Manager and the recognized vault in the system. 4.1.6. While servicing the withdrawal request, the Vault Manager shall verify and keep record of the following documents: 4.1.6.1. Proof of Identity (POI) and Proof of Address (POA) of the beneficial owner 4.1.6.2. Proof of Identity (POI) and Proof of Address (POA) of the authorized representative including the authority letter 4.1.6.3. Withdrawal request letter 4.1.7. After verification of documents, the Vault Manager shall release the gold as intimated in the system and record the details of the gold released for withdrawal in the system. 4.1.8. The Vault Manager shall take an acknowledgment receipt from the BO/authorized representative and simultaneously extinguish the EGR corresponding to the gold. 4.1.9. The Vault Manager shall intimate the extinguishment of EGR to the Depository to carry out extinguishment of such EGR from the demat account of the Beneficial Owner. 4.2. Cut-off time 4.2.1. The Vault Manager shall allow withdrawal of gold from 10:00 AM to 03:00 PM. 4.2.2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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