What are e-Series products? How do they work? Is delivery given across products in e-series ?
NSEL's e-Series products are India's first and unique commodity investment product in demat form. The product has been designed for retail investors and portfolio managers who look at commodities as an asset class and to enable them to invest their funds into commodities in smaller denominations without the hassles of holding physical commodities.
Currently, NSEL offers five products under e-Series – e-Gold, e-Silver, e-Copper, e-Zinc and e-Lead. Investors are allowed to invest in e-Series in smaller trading lot size such as 1gm for e-Gold, 100 gm for e-Silver and 1 kg each for e-Copper, e-Zinc and e-Lead.
Physical delivery against surrendering of e-Gold units are allowed in denominations of 8 gm, 10 gm, 100 gm and 1 kg while for e-silver physical delivery denominations are 100 gm, 500 gm, 1 kg, 5 kg and 30 kg. As of now, physical delivery against e-Gold and e- Silver is facilitated across seven locations, viz, Mumbai, Ahmadabad, Jaipur, Delhi, Kolkata, Hyderabad and Chennai.
One can buy, hold and sell e-Series products in demat form just like equity shares. NSEL also extends the facility of Systematic Investment Plan in e-Series for regular savings. In order to invest in e-Series, an investor has to enrol with a member of NSEL and open a demat account with exchange empanelled depository participant.
Thereafter, order could be placed either calling the broker to buy and sell e-Series products or one can directly trade in e-Series through online trading terminals. If a buyer wants to take delivery in the physical form, he needs to request for re-mat along with his choice of delivery locations and the denominations with the depository participants with whom he has a demat account.
Can you give us numbers on the number of demat accounts opened for trading in e-Series products since its launch in 2010?
Till date, 136 DPs are empanelled with NSEL and many more are in the pipeline. There are more than 50,000 trading terminals providing trading facilities to investors and around 2 lakh demat accounts have been opened for trading in e-Series products since its launch in 2010.
With features like transparent pricing, liquidity, seamless trading and zero holding costs, these products are proving to be a very attractive investment option for small investors and a good instrument for portfolio diversification by HNIs.
e-Series products are best suited for retail investors as they can invest in these like a Systematic Investment Plan on a daily, weekly or monthly basis and also have the option of getting physical delivery. Since, these products are in demat form, investors do not have to be concerned about storages issues of these commodities.
Which is the highly traded e-Series product? How are volumes in e-Gold and e-Silver currently (day's average volume)?
e-Series products have been a great success in NSEL and the turnover of these products have been rising steadily since the launch of first product e-Gold in 2010. Average daily turnover of e-Series increased from Rs 34 crore in 2010 to Rs 860 crore in 2011.
Currently, e-Silver and e-Gold are the highest traded e-Series products on NSEL. The Exchange recorded an average daily turnover of Rs 150 crore in e-Gold and Rs 350 crore in e-Silver for the financial year 2010-11.
Is there enough liquidity in these e-Series product counters that lets an investor have an easy exit by selling his holding as and when he wants?
Daily turnover of around Rs 1,000 crore is the proof of high liquidity on these counters. Market depth, long trading hours, ease of entry and exit are some of the most attractive features of e-Series products.
Does e-Gold as a product work better for an investor compared to buying a coin from a jeweller or a banker?
e-Series products have been designed and developed by NSEL keeping in mind the convenience of the client in buying and selling commodities in a transparent manner at a single price point across pan-India markets which are accessible to all.
For buying and selling e-Products, the impact cost is nearly zero. It can be traded throughout the day from 10 a.m .to 11.30 p.m. There is no risk pertaining to impurity or weight differences.
Hence, e-Series products combine the benefits of holding physical commodity; demat records and seamless entry-exit process.
You give an option to convert the e-gold holding to jewellery. How does the conversion happen? Is there any additional charge that the investor needs to pay when he converts the holding in to jewellery?
Investors can approach jewellers empanelled with NSEL. They can transfer demat units to the account of jewellers and obtain jewellery of equivalent quantity after paying making charges.
What are the various charges on e-Series products? How is capital gains taxed here?
The tax treatment is the same as any capital gains from buying or selling of physical commodities/bullion. If the commodity is sold within 36 months, short-term capital gains is applicable, which implies that the assessee has to pay tax according to his tax bracket.
However, if the commodity is held for more than 36 months, then the tax is calculated on the basis of long-term capital gains, which is 20 per cent. The benefit of indexation is also allowed for calculating long-term capital gains.
Moreover, at the time of investing in commodities, STT is not applicable. Apart from the usual brokerage and DP charges, there are no other charges for holding e-Series contracts in demat accounts.
Does an investor have to open a separate demat account for investing in e-Series despite holding one already for commodities and one for equities?
Every client willing to trade in any of the e-Series contracts is required to open a beneficiary account with one of the depository participants empanelled with NSEL. However, if an investor already has a demat account for trading on MCX, the same account can be used for NSEL as well.
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