National Spot Exchange Ltd (NSEL), an arm of Multi Commodity Exchange (MCX), is planning to launch gold and silver (bullion) contracts in spot market in Kolkata by end of this month.
NSEL had rolled out spot exchange last month, with contracts for cotton and bullion in Mumbai and Ahmadabad markets respectively
According to Anjani Sinha, managing director, NSEL, the bullion contract to be launched in Kolkata will be same as the contacts applicable in Ahmadabad, and NSEL has already initiated talks with gold and silver dealers operating in the city. After Kolkata, NSEL will launch spot exchanges for bullion in Delhi, Chennai and Mumbai.
The gold and silver contracts will be single day contracts, which can be also traded through demat account, as well as through warehouse receipt (for non-demat account holders), in contracts available in 100gm and one kg denominations for gold and 30 kg for silver. Later, NSEL would also launch smaller lots of bullion contracts, said Sinha.
Also, NSEL will test gold in its own laboratories, prior to its acceptance, and in case of default NSEL will conduct auction at the cost of defaulting buyer or seller. NSEL will provide counter guarantee for all the trade.
On an average, the daily turnover of bullion trade in NSEL spot market has been in the range of Rs 4-5 crore daily, with about 70-80 per cent of the contracts delivery-based, and 20-30 per cent on an intra-day trade basis.
"In Kolkata gold is generally traded in premium, because of the regional imbalances." said Sinha.
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This apart, NSEL will launch maize contracts in Bihar, castor seed and jeera in Gujarat, guar seed in Rajasthan and Soyabean in Maharashtra in by the end of this year.
Banks can directly become members of NSEL or participate as constituents.