The Securities and Exchange Board of India (SEBI) has given in-principle apporval to the BSE to commence trading in electronic gold receipts (EGR) on the exchange, the bourse said in a filing to the National Stock Exchange.

“To seek final approval for the introduction of the EGR segment, we have been advised to submit additional information,” BSE said on February 9.

The framework divides the transaction chain into three branches—the creation of EGRs, trading on EGRs on exchanges and conversion of EGRs to physical gold.

Besides the spot exchange, SEBI allowed for vault managers to apply to act as custodians of physical gold and for conversion of EGRs into gold. SEBI made EGRs fungible and allowed for interoperability among vault managers to reduce costs.

“The gold exchange is expected to create a vibrant gold ecosystem commensurate with India’s large share of gold consumption,” the market regulator had said after a board meeting in September.

SEBI had approved the setting up of the gold spot exchange at this board meeting.