SEBI Proposes Vault Framework For Bullion-Linked ETFs And Derivatives

The Securities and Exchange Board of India (SEBI) has proposed broader oversight of physical bullion used in regulated market products. The move is aimed at strengthening the framework for India’s digital bullion market.

SEBI’s proposal would extend its existing vault manager framework to cover all physically settled bullion underlying SEBI-regulated products. This could bring bullion-linked products such as exchange-traded funds (ETFs) and derivatives under the framework.

At present, the framework applies to physical gold supporting electronic gold receipts (EGRs).

How Would The Proposed Framework Work?

Under the existing EGR structure, physical gold is stored with authorised vault managers. It is represented through electronic receipts that can be traded on exchanges.

SEBI has also proposed a separate circular covering the EGR framework and operational requirements for vaulting services across specified bullion-related instruments.

This would establish common requirements for managing the physical bullion underlying these products.

What Happens Next With The SEBI Bullion Proposal?

The proposal is currently at the consultation stage. SEBI has invited stakeholders and other members of the public to submit their comments on the consultation paper by 01 September 2026.

India remains one of the world’s largest gold-consuming markets. Electronic forms of gold exposure have also expanded in recent years.

The proposed changes are therefore relevant to India's wider digital bullion market. Here, investors can access gold through market-linked products without directly holding physical bullion.

The consultation process will determine how SEBI takes the proposal forward.

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