Reborn from former regional exchange; Haryana state co-op takes 15% stake.
Ace Derivatives and Commodity Exchange, the first to be transformed from a regional exchange to a national multi-commodities futures trading platform, was launched today. The Kotak-anchored exchange is set to start futures trading in soybean, soyoil, rape/mustard seed, chana and castor seed tomorrow.
Started with a limited access of Gujarat-based castor seed traders in 1954 as the Ahmedabad Commodity Exchange, the Kotak Group successfully obtained approval in August from the commodity markets regulator, the Forward Markets Commission, for a complete transformation in the exchange platform.
With the launch, the first set of contracts will be available for trade for delivery on November 20, December 20 and January 20. The lot size of trading is fixed at 10 tonnes of each contract.
The exchange has 175 registered members; in addition, 60 from the original regional exchange will also be starting trade on this platform tomorrow.
“Exchanges are crucial components of financial infrastructure, which reduces transaction cost and waste in transit, benefiting both consumers and farmers. We believe a robust and modern exchange focused on multiple commodities can bring about a transformation to the inclusive benefit of all stakeholders across the nation,” said Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank.
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The objective is to integrate spot commodity trade with futures, so that farmers will get higher prices of their produce, while consumers will get commodities at a lower price, said Bhupinder Singh Hooda, chief minister of Haryana. Hafed, the state’s farmers cooperative, has taken 15 per cent stake in the exchange and also plans to hedge risk on the platform on behalf of is members.
“The exchange has already got approval from the FMC for nine more contracts in various commodities, including gold, silver and copper, which will be flagged off early next year,” said Dilip Bhatia, CEO of the exchange.
As an anchor investor, the Kotak Group will have to divest its equity from 51 per cent to 26 per cent, which the Group is scouting for investors currently. The divestment will be done in due course to comply with FMC norms.
Bank of Baroda, Corporation Bank and Union Bank are other investors in the exchange. Bhatia said emphasis will be laid on untapped commodities, markets and areas.
Anil Malik, managing director of Hafed, said that they were setting up a subsidiary to commence trade in the futures exchange (needed under the rules, as they cannot do so directly).