'National bourse to rise from regional comexes'

A national-level commodities exchange is set to emerge out of a number of regional exchanges to have a unified influence on commodities trade, said P H Ravi Kumar, MD and CEO, National Commodity & Derivatives Exchange Ltd (NCDEX), on the sidelines of Commasset 06, a two-day seminar on commodities.

The regional commodities exchanges currently have little bearing on national commodities trade and their voices are hardly taken seriously either by the regulator or the market participants.

However, regional commodities exchanges recently expressed reservations over commodities market regulator Forward Markets Commission's (FMC) suggestion to equip themselves with advanced technologies for online trade.

Although the emergence of regional exchanges on the national level would increase competition in commodities trade, it would bring about a healthy competitive environment for the better, noted Ravi Kumar.

Re-emphasising the role of exchanges in commodities trade, Ravi Kumar added, "We are just a facilitator of futures trade and not the actual buyer and seller of any commodity. An exchange is just a price-discovery channel and, hence, the price of any commodity varies on actual demand and supply position and not because of futures exchange."

Unlike financial markets, where sentiments play a dynamic role, only fundamentals play a key role in determining the real prices of commodities, he pointed out.

There should either be an increase in supply or a decrease in demand to control the rising prices of commodities. Neither supply of nor demand for any commodity can be altered through an exchange.

One needs to look at the ongoing trends in commodities carefully and then decide on the positions, Ravi Kumar suggested.