Explain the futures contracts started in IIBX recently?

 Here’s a comprehensive article explaining the new Gold Futures contracts recently launched on IIBX (India International Bullion Exchange):

🏛️ What Is IIBX?

  • IIBX, located in GIFT IFSC, Gandhinagar (Gujarat, India), is India's first international bullion exchange, launched on July 29, 2022.

  • Promoted by entities like NSE, BSE’s India INX, MCX, NSDL, and CDSL, and regulated by the International Financial Services Centres Authority (IFSCA).

1. Launch of Gold Futures Contracts

  • On July 18, 2025, IIBX executed its first-ever Gold Futures trade, marking a major milestone in India’s bullion futures market.

Key Benefits:

  • Contracts are denominated and settled in US Dollars, enabling exposure to international gold price movement directly from an Indian platform.

  • Domestic jewellers, bullion dealers, refiners, and other stakeholders can now hedge price risk locally — no longer required to use overseas subsidiaries to access international prices .

2. Product & Contract Specifications

Contract Parameters:

  • Symbol: GOLD

  • Underlying: Spot gold (32 troy ounces / ~1 kg per contract)

  • Quoted in USD per troy ounce (e.g., bid 1,200.10 — ask 1,200.20) 

  • Tick size: USD 0.10 per troy ounce (i.e. USD 3.2 per contract)

  • Available contract months: January, March, May, July, September, November

  • Trading hours: Monday–Friday, Session 1: 04:30–17:00 IST; Session 2: 17:00–02:30 IST 

Settlement Details:

  • Cash-settled in US Dollars based on DGCX Gold Futures settlement price at expiry (3rd last business day of contract month) .

  • Daily mark-to-market (MTM): VWAP over final 30 minutes of trading (or entire day VWAP if insufficient trades).

Position Limits & Risk Controls:

  • Client limit: Max 10% of open interest or 50,000 contracts (whichever is higher). Brokers capped at 30% or 500,000 contracts. Price bands initially at ±3% .

  • Margins: Computed in USD using SPAN methodology, stress-tested daily with extreme-loss buffers and real-time computation .

3. Regulatory, Operational & Delivery Framework

Regulatory Backing:

  • The launch builds upon the RBI’s master directions (Dec 2022, updated Apr 2024) permitting domestic entities to hedge in IFSC under specific conditions, and the IFSCA’s regulatory framework established in 2020–2021 .

Participant Requirements:

  • Entities trading futures must maintain separate USD-denominated bank accounts for margin, settlement, and client segregation via IIBX empaneled clearing banks .

Physical Delivery Rules:

  • Short positions: Only Qualified Suppliers may deliver physical gold via Bullion Depository Receipts (BDRs) backed by vault-stored inventory. Resident entities cannot deliver.

  • Long positions: Only Qualified Jewellers and Special Category Client Banks may take delivery by paying via Domestic Tariff Area (DTA); other domestic participants cannot opt for physical delivery.

Delivery Intent Submission:

  • Since September 2024, participants can submit or withdraw delivery intentions up to the E‑2 trading day, with client-level position blocking on submission.

4. Market Participation & Ecosystem Growth

  • SBI became the first Indian bank to join IIBX as a Trading‑Cum‑Clearing Member in May 2024, boosting accessibility and liquidity.

  • As of the launch:

    • 179 Qualified Jewellers (QJs)

    • 441+ Tariff Rate Quota (TRQ) holders registered—with over 780 more TRQ applications under review.

  • IIBX introduced a Liquidity Enhancement Scheme (LES) to incentivize participation in Gold Futures trading.

5. Strategic Vision & Future Roadmap

  • IIBX aims to develop a robust, transparent bullion ecosystem in both spot and derivatives segments, serving domestic and international players.

  • The exchange intends to add more instruments such as Silver futures, metal loan/repo products, and possibly vaulting networks across SEZs, under regulatory approval.

  • The goal is to support India’s “onshore the offshore” initiative: domestic hedging in USD routes without reliance on overseas entities.

🔍 Why It Matters

  1. Hedging access in USD, via a regulated exchange, gives gold-intensive businesses greater risk management tools without overseas exposure.

  2. Physical settlement via BDRs ensures accountability and quality-backed bullion.

  3. IFSCA-regulated platform brings standardized processes, transparency, and international norms to India’s bullion derivatives market.

  4. At a macro level, it positions India as an emerging bullion trading hub, potentially competing with COMEX, LBMA, and regional alternatives.

📌 Summary Table

Feature Details
Launch Date               First futures trade on July 18, 2025
Product               Gold Futures, USD‑denominated
Contract Size                           32 troy oz (~1 kg)
Delivery             Cash-settled by default; physical via BDRs for eligible participants
Key Participants             Qualified Jewellers, TRQ holders, refiners, etc.
Clearing & Custody             Through IIBX-empaneled banks, separate USD accounts
Risk Controls              SPAN margins, real-time risk monitoring, position limits
Support Schemes             Liquidity Enhancement Scheme (LES)
Strategic Scope             Expansion into silver, repo, gold loans, global participation

✅ Looking Ahead

  • Silver Futures are anticipated next—expected to launch once regulatory permissions align.

  • Addition of repo markets, gold metal loan facilities, and an expanded network of IFSCA‑approved vaults across SEZs.

  • Broader participation from international banks and stakeholders to deepen liquidity and price discovery.

In closing, the gold futures contract launch by IIBX on July 18, 2025 represents a critical step toward onshore bullion hedging in USD within India. Supported by comprehensive regulation, standardized infrastructure, and a clear roadmap, it's a major leap toward building a global-grade bullion marketplace in GIFT IFSC.


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