November 11, 2012

Press Release No. 1

NSE sets a new record in Gold ETF; records a traded value of Rs. 1337 crore on Dhanteras

· This is the highest value recorded on a single day.

· Traded value more than doubles from last year’s Dhanteras levels

On the auspicious occasion of Dhanteras, the National Stock Exchange [NSE] has recorded the highest ever traded value, on a single day in gold ETF’s. The traded value was Rs.1337 crore in gold ETF’s, at the close of trading today. Last year on Dhanteras, NSE had recorded a traded value of Rs. 636 crore. Today’s Rs. 1337 crore is a 110 per cent increase from last year’s level.

Gold ETF units worth 4441 kgs were traded on Dhanteras (each unit of ETF is equal to a gram of gold), which is an 81 per cent increase from last year’s Dhanteras levels.

Since Dhanteras fell on a Sunday, NSE had a special trading session in gold ETF’s between 11:00 am and 3:30 pm. The special session was organized to give an opportunity to investors to invest in gold ETF’s, on a day when gold buying is considered auspicious.

With more awareness on the advantages of gold ETF, as compared to physical gold, interest in this asset class has been picking up. This has been reflected in the growing volumes and the increase in the number of participants since 2008.

Today a high 70,440 investors traded in gold ETF units on the occasion of Dhanteras. Last year, Dhanteras was on a working day and investors were allowed to trade till 8 pm.

Gold ETFs have many advantages over physical gold. For instance, Gold ETFs are easy to store, there is no fear of theft because they are in demat form and there is no depreciation when you sell the units. Gold ETFs can be bought in units equal to just a gram or half a gram of gold.

Gold ETF’s come with an assured purity of 99.5% and there are no premium charges involved either, which have to be paid while picking up gold coins or jewellery. When you purchase gold coins or jewellery, you need to pay a premium of 5 to 7%, which is not the case in Gold ETFs.

The biggest advantage of trading in Gold ETFs is that there is no tax liability involved, unlike in holding physical gold. Anyone who has assets including gold worth more than Rs 30 lakhs has to pay a 1% wealth tax. However, if an investor buys units of Gold ETFs, there is no wealth tax involved. In addition, on physical gold, an investor has to pay a 1% Value Added Tax, which is not applicable for gold ETF’s.

The gross monthly traded value on Gold ETFs on NSE, stood at Rs 1,195 crore , taking an average of the first seven months of 2012 ( Jan to July 2012)as against Rs 933 crore, in the first seven months of 2011, depicting a rise of almost 28%.

The year on year growth in traded value on NSE has also been high. From a gross value of 2345 crore in financial year 2008 -9, it has gone up to 23,039 crore in 2011-12, a growth of 882 per cent.

The number of clients has gone up from 97,000 in 2008-9 to 4.05 lakhs in 2011-12, a 318 per cent increase.

Currently, 14 AMCs are offering this product on the NSE platform and the product has given 11 per cent returns in the last one year.

In terms of the number of tonnes traded on NSE, the volume has increased from 18 tonnes traded in 2008-9 to 92 tonnes in 2011-12, a 411 per cent increase.