Financial Daily from THE HINDU group of publications
Friday, Apr 22, 2005
Financial Daily from THE HINDU group of publications Friday, Apr 22, 2005 |
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Agri-Biz & Commodities
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Commodity Exchanges NMCE plans ready delivery contracts in 3 goods V. Sajeev Kumar
Mr Kailash Gupta
Recently in Ahmedabad , PROVIDING an impetus to the trade flow in commodities, National Multi Commodity Exchange of India Ltd (NMCE) is in the process of introducing `ready delivery contract' through online trading platform. The ready contracts, being introduced shortly, will be precisely on the lines of equity market of T+2, Mr Kailash Gupta, Managing Director of the Exchange, told a group of visiting journalists from Kochi. Initially, spot delivery contract will be available in rubber, pepper and cardamom and new commodities were to be introduced as per trade requirement from time to time, he said. Mr Gupta said the opening of spot delivery market through NMCE's online trading would eradicate spot trading rigidities and integrate various layers of small stakeholders and intermediaries between farm and factory. "A well integrated spot market is the pre-condition for developing successful commodity futures market", he added. The clients, he said, would have to pay a margin upfront on all open positions at the end of trading day in order to avoid the two-day risk, which would be released by the way of pay-in and pay-out of settlement. Contract specifications, price quotation, trading unit etc would be the same as in present futures contract of respective commodities. NMCE's research indicated that the commodity traders would reap larger benefits as happened in the stock markets. But there may be perceived fear in some of the traders regarding online spot/ready market. Referring to the activities of the exchange in regular deliveries, Mr Gupta said nominal physical delivery in rubber, pepper and cardamom at NMCE had indicated that the market was moving in the right direction. In April 2005 series, the exchange witnessed physical delivery of 516 tonnes in pepper as against volumes of 19,932 tonnes; 426 tonnes in rubber against the volume of 26,810 tonnes and 7.9 tonnes in cardamom as against volumes of 4,416 tonnes. However, the percentage of physical delivery out of total volume in April series of commodities such as rubber, pepper and cardamom was meagre. The volumes of rubber and pepper also declined due to stable prices and proper price discovery. These apparent trivial physical deliveries were healthy for commodity futures market functioning, he said. He said leading broking houses from the State such as Geojit and JRG were expanding to other States. According to Mr Gupta, there were also plans to revive futures trading in coconut oil. But before its commencement, he said the exchange had proposed to hold discussions with coconut traders regarding their problems. NMCE has touched a turnover of Rs 100 crore a day. Last year, the turnover was to the tune of Rs 40,000 crore, he said.
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