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CS Professional · IFSCA - Regulations, Listing and Compliances · India International Bullion Exchange (IIBX)

Anita holds BDRs in her account and wants to convert them into physical gold. Which statement correctly describes what she can do under the IIBX framework?

Anita can redeem her BDRs and obtain the underlying physical bullion from the vault manager by following the prescribed process. Redeemability into metal is the key feature of a depository receipt, so it is not merely a tradable paper with no delivery right.

  1. AShe may redeem the BDR with the vault manager and take the underlying bullion, subject to the prescribed procedureCorrect
  2. BShe can never redeem BDRs because they are only tradable instruments
  3. CShe can redeem only by selling to the exchange at a discount
  4. DShe can take delivery only in loose coins from any jeweller

Explanation

A BDR is a receipt backed by physical bullion, and the holder can convert it into underlying bullion through the prescribed redemption and delivery process at the vault. The claim that BDRs are never redeemable is wrong because redemption into metal is the core feature.

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