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Our Bureau

Mumbai Oct. 15

IT is happening sooner than anyone expected, and at a time when the stock market is booming. Stockbrokers are taking up membership of the nationwide commodity exchanges in large numbers. Many perceive commodity futures trading as the emerging big business opportunity.

With the Government providing policy support by removing age-old restrictions on commodity trading, and the excellent Southwest monsoon providing an ideal context for commodity business to take-off, there is a perceptible euphoria amongst market participants.

Successful stockbrokers are bracing to meet the new challenge of the commodity market. There surely are synergies between the two markets.

Brokers have experience in operating in mature markets, have knowledge and expertise in securities intermediation, and they understand settlement and clearing systems.

However, migration from equity to commodity markets is unlikely to be without challenges. For instance and importantly, equity market players have to acquire product knowledge and market knowledge relating to commodities.

No wonder, several stock broking firms that have taken up membership of commodity exchanges are on the look out for commodity specialists. A couple of broking firms Business Line spoke to confirmed that they are in the process of setting up commodity research desk.

Interest evinced by stockbrokers in commodity markets has been confirmed by more than one commodity exchange. According to Mr Jignesh Shah, Managing Director of Multi Commodity Exchange (MCX), out of over 100 members that his exchange has at present, stockbrokers represent close to 50 per cent while commodity brokers account for 40 per cent and the rest professionals.

``MCX has already initiated steps to set up a research desk to disseminate market information amongst participants; and soon we shall begin a training programme for our members so that they get to understand the commodity market better,'' he said.

The Securities and Exchange Board of India recently permitted stockbrokers to take up membership of commodity exchanges, but as a separate entity. In many of the developed economies, the trading volumes in commodity markets are bigger than those in equity markets.

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