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Our Bureau

Mumbai , Sept. 8

INDIAN corporates and other energy users can now use the Brent crude contracts to hedge their price risks on the National Commodity and Derivatives Exchange Ltd (NCDEX).

The International Petroleum Exchange (IPE), Europe's leading energy futures and options exchange, and NCDEX, on Thursday announced that they have entered into a strategic agreement to launch Brent crude futures on NCDEX next week.

The announcement was made at the 26th International SFOA Burgenstock Meeting in Switzerland — in the presence of Mr Richard Ward, Chief Executive IPE, Mr P.H. Ravikumar, Managing Director of NCDEX, and IPE officials.

"We have received necessary approvals from Forward Markets Commission (FMC). The exchange will launch Brent crude oil contracts on September 15. This is for the first time that any Indian commodity exchange would launch any specific contracts with the international tie-up by using its licence," Mr Narendra Gupta, Chief Business officer, NCDEX, told Business Line.

Mr Gupta declined to comment on the commercial aspects of the tie-up.

Trade timings will be from 10.00 a.m. to 11.30 p.m. The contract size would be 100 barrels. The contract would be traded and cleared exclusively on NCDEX. As part of the agreement, the IPE would make available its real-time prices on all NCDEX trading screens in the county (now over 6,500).

Under the terms of the agreement, NCDEX would launch a rupee-denominated Brent crude futures contract to be traded on NCDEX in India and settled on its monthly expiry with reference to the IPE Brent Index, a NCDEX release said.

The reference rate of RBI would be taken for currency conversion. IPE Brent prices would be officially displayed on NCDEX platform.

"The IPE's Brent crude futures contract is a global benchmark for pricing of the world's oil. We are delighted to enter into this co-operative venture with NCDEX, which we believe will reinforce the significance of the Brent crude futures contract," said Dr Richard Ward, IPE Chief Executive, according to the release.

"The tie-up with IPE represents a significant step in integrating the Indian energy markets with the international markets. The NCDEX IPE Brent crude futures contract offers an extremely useful and effective hedging tool for Indian participants with energy related price risks," Mr P.H. Ravikumar, Managing Director and Chief Executive of NCDEX, said in a release.

The Brent crude futures contracts on NCDEX allows Indian participants to trade rupee-denominated Brent crude futures contracts, priced and settled with reference to the benchmark IPE Brent crude futures contract.

A rupee-denominated Brent crude oil contract will enable the domestic oil companies to effectively hedge an important proportion of their crude oil price risk.

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