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The National Stock Exchange (NSE) will plunge into agri commodity trading with eight new contracts that are not traded on any other exchanges, sources told BusinessLine .
The proposed new contracts for which the exchange has sought permission from the Securities and Exchange Board of India (SEBI) include almonds, castor oil, soya degum, urad dal, toor dal and pulses.
NSE’s rival, the Bombay Stock Exchange (BSE), which started agri commodity trading in February, has launched trading in guar seed and guar gum. BSE claims to have cornered more than 30 per cent market share in guar seed trading.
SEBI has allowed exchanges to offer financial incentives on commodities not traded on other exchanges. NSE may be able to use market incentive schemes for the new contracts.
Though the entry of NSE and BSE into agri commodity has created a buzz, the space has seen lacklustre growth for a while, as 90 per cent of commodity trading volumes in India is concentrated in the oil and metal space.
The physical sale of agricultural produce is still administered by States, with each following its own regulations. Both BSE and NSE are trying to develop agri commodity trading, as there is no transaction tax in this segment. This may attract traders as they can generate arbitrage and jobbing volumes, experts say.
An NSE spokesperson said, “We are in the process of examining several agri commodities products. All products will be launched as per regulatory guidelines and procedures.“
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