Bullion bourse, NCDEX alliance raises a row

3 Bombay Bullion Association members quit protesting tie up with NCDEX

Three members of the Bombay Bullion Association, including vice-president Harmesh Arora, have resigned just as the apex body of the bullion traders inked a pact with the National Commodity and Derivatives Exchange (NCDEX), an industry official said on Saturday.

The market is abuzz with talk that the three office-bearers of the bullion association have resigned to protest the tie-up with the NCDEX as the bullion body has a similar pact with the Multi Commodity Exchange (MCX).

The bullion association had in October 2003 entered into an agreement with the MCX to co-operate in bullion futures and it has signed a similar agreement with the NCDEX on Saturday.

However, Arora downplayed the resignations at the association. "I have resigned owing to some personal reasons, while two others have stepped down for reasons that have nothing to do with Bombay Bullion Association's tie-up with the NCDEX," he said.

Meanwhile, an NCDEX release said the agreement will enable all members of bullion association to become trading members of NCDEX.

The memorandum of understanding between the two organisations is expected to leverage the synergies of the bullion association and the trading platform of NCDEX to make the market more efficient and dynamic, the release said, quoting NCDEX managing director and chief executive officer P H Ravikumar.

The agreement is a major step to further strengthen and accelerate nation-wide bullion trading in the country, it said.

Sonavala said, "Initially we expect 25-30 members to start trading on NCDEX apart from the 29 already trading on the Multi Commodity Exchange (MCX)," he said adding the BBA has total 220 members.

As per the deal, bba members will have to pay Rs 1.5 lakh for trading and as deposit against Rs 35 lakh being paid by trading cum clearing members.

The timing of the venture is quite appropriate as bullion prices have been quite volatile in the last few months.

The market was looking for a trading alternative to transfer its price and trading risks, said Shrikant Subbarayan, head, business development, NCDEX. This association will pave a way for creation of one such platform, he said.