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Virendra Verma

Mumbai , May 28

THE Bombay Stock Exchange is planning a foray into commodities trading exchange business.

The BSE, Asia's oldest stock exchange, has planned two options to venture into commodities trading exchange.

"One of the options being weighed is to adopt the application service provider (ASP) route. The other would be to set up a subsidiary which would operate as a commodities exchange," Mr Rajnikant Patel, Executive Director &CEO, told Business Line.

He said the Finance Ministry is keen on a convergence of the capital and commodities market.

Under the ASP route, the BSE would provide expertise in setting up the trading platform for commodities.

He said that the BSE could be an ASP for a commodities exchange. "We have both the technology and the reach. The technology route is being evaluated and other modalities are being worked out."

For this, the BSE is in talks with various regional commodities exchanges.

There are several regional or commodity-specific exchanges that do not have the expertise in setting up on-line trading platform and their financial health is also not very good. On the other hand, the BSE has the requisite expertise in on-line trading platform with its Bombay On-line Trading running successfully for the last 10 years.

On the rationale behind the plans to enter into this new venture, Mr Patel said there is a slot the BSE can occupy, given its brand equity in the commodities space. "There are several common brokers who operate in both capital and commodities markets," he added.

In the last one and half years, on-line commodities trading has taken-off very well since the National Commodity and Derivatives Exchange (NCDEX), the Multi-Commodity Exchange of India (MCX) and the National Multi-Commodity Exchange (NMCE) became operational.

The daily average turnover on the NCDEX is around Rs 2,300 crore, on the MCX it is Rs 1,600 crore and on the NMCE it is around Rs 70 crore.

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BSE eyes commodities exchange business

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