The National Stock Exchange (NSE) is set to take on rivals Bombay Stock Exchange (BSE) and Multi Commodity Exchange (MCX) by developing a standard to make domestic gold deliverable on its platform, a source close to the NSE told BusinessLine .

At present, Indian exchanges allow gold delivery only from those refineries whose bars have been accredited by the London Bullion Market Association (LBMA), meeting the exacting standards for trading on the global OTC market.

The NSE will help more domestic refineries get accredited, helping their gold become deliverable on its platform, the sources said. This will also help in spot trading of gold.

Delivery-based settlement

SEBI has mandated exchanges to move towards a delivery-based settlement system instead of a cash-based one. Under the cash system, futures contracts are settled by paying the difference in cash while the other method requires the delivery of goods.

If there are more refineries that can deliver standard goods on a platform, and if there is even a minor difference in spreads, it could boost volumes on that particular platform.

Bullion metals and crude are the largest traded futures contracts in the commodity derivative segment in India and MCX holds the monopoly for futures and options trade in this segment.

Both the BSE and NSE aim to corner the market. All the three exchanges are also awaiting government approval to launch spot exchanges for the trading of bullion.

This apart, both the BSE and NSE have shown keen interest in developing agri-commodity contracts. The NSE plans to launch trading in eight agri-related contracts — almonds, castor oil, soya degum, urad dal, tur dal and pulses. The BSE launched agri-commodity trading in February with guarseed and guar gum.

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