High gold prices, a lack of participant interest, and inadequate liquidity, according to traders, have made trading on Indian International Bullion Exchange (IIBX), the country’s first international bullion platform, lackluster. Beginning in July, IIBX is operating out of the International Financial Services Centre (IFSC) building in Gandhinagar’s Gujarat International Finance Technology City (GIFT City). Given India’s high levels of gold commerce and consumption, the world’s second-largest consumer of the metal after China the exchange’s gold trading volumes have remained scant since its inception.
According to IIBX data, a total volume of 532 kg (or $28.7 million) in trading was registered between the start on July 29 and December 16. The daily volume averages out to 6.57 kg, which is equivalent to $354,335. The exchange, which the prime minister opened at the Gift City, was largely shut down for much of December.”The IIBX wasn’t adequately marketed to the foreign community before the launch or even after. The offerings at IIBX were not well known to the world’s bullion suppliers until recently. As a result, the exchange has very few qualified providers (QS).
A member from Mumbai commented, “The exchange may be doing its part (to increase volumes).” However, it appears that its chances are being harmed by rising gold prices and a lack of member incentives. Between authorized dealers (ADs) and gold-sourcing jewelers or bullion brokers, it must compete with an established generation-sold method. However, Suresh Hundia, a well-known bullion trader from Mumbai, expressed enthusiasm for the system.
“Gold is currently expensive. As a result, the gold has already attracted no buyers. Investors are not something we anticipate happening. The exchange may have an activity once prices stabilize because this is a transient phenomenon. However, problems including the absence of delivery centers in Mumbai, hefty annual membership dues at IIBX, and expenses would act as deterrents.
