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The National Spot Exchange Ltd (NSEL) plans to introduce demat trading in small lots of agri-commodities from July.
Addressing newspersons here on Friday, Mr Anjani Sinha, MD and CEO, NSEL, said the move would enable farmers to trade directly on the exchange, as against the present system where farmers' cooperatives connected to NAFED, which holds a 1 per cent stake in NSEL, sell their produce on the NSEL platform.
Mr Sinha said that castorseed, black pepper, guarseed, guar gum and menthol were some of the commodities that would be placed on the retail platform.
Trading in small lots in nickel, lead and aluminium may be introduced in a month, Mr Sinha said. He said NSEL — in which MCX's promoter Financial Technologies has a 99 per cent stake — planned to introduce trading in 20 commodities by the end of the calendar year, against four commodities, namely, gold, silver, copper and zinc, at present.
These four commodities have been opened to retail trade. Mr Sinha said that although gold (Rs 150 crore) and silver (Rs 300 crore) were likely to show highest trade growth, at present accounting for more than half of NSEL's daily turnover of Rs 700-800 crore, non-ferrous metals and agro-commodities, in that order, were promising areas. At present, daily trade in agri-commodities is about Rs 60-70 crore. He said it was ideal to “invest in commodities for beating inflation.”
He said exchange traded funds in gold would not prove to be as popular as spot trading because the AMC's fees bring down the net asset value. As for investing in commodity companies, the value of the scrip would be determined by management issues and movements of the Sensex, rather than the commodity alone.
Mr Sinha ruled out the participation of exchange traded funds in silver and agri-commodities in the current regulatory environment, and said it would only be possible for such funds to invest through FIIs or participatory notes.
Mr Sinha said that a central monitoring agency that would require all warehouses to disclose stocks would lead to improvements in managing inflation. NSEL has a network of warehouses across 93 locations to stock a variety of commodities.
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