Comexes to launch gold spot trading

The country's two leading commodity exchanges, the Multi Commodity Exchange (MCX) and the National Commodity & Derivatives Exchange (Ncdex), are considering launching spot iGold for daily settlement in association with the Bombay Bullion Association (BBA).

The spot iGold will be different from the existing weekly iGold futures on the MCX, with gold traded on the spot market, settled and delivered daily. The delivery for the morning session will be settled at 5:30 pm, while that for the evening session will be done at 11:30 pm.

"We do have iGold, a weekly futures contract, but the new one will be launched on the spot exchange when it comes on stream," said Joseph Massey, deputy managing director of MCX.

An Ncdex official also confirmed that the product will be launched on the spot exchange. But, he emphasised that it is the BBA's idea and talks are at the very initial stage.

Suresh Hundia, president, BBA, added that the plans are at a preliminary stage and nothing has been finalised as yet. "We do have such plans, but their implementation will take some time," Hundia said. A source close to the development said the main aim for iGold on both the commodity exchanges is to provide uniform prices for the entire country. Today, indicative prices provided by the BBA are authentic, but not tradeable. Hence, a benchmark rate will bring more transparency in the gold trade throughout the country, he added.

Scotia Moccatta, ICICI and HDFC are the three banks currently engaged in the delivery of gold.Apart from providing benchmark gold rates, the BBA has some other initiatives, such as working on Bullion Bush "" a concept aimed at bringing all bullion traders close to each other "" launching a BBA exchange, a BBA museum, initiating BBA awards and bringing BBA hallmarking and certification of international standards.

For the BBA Bullion Bush, in line with Gold Souk in Dubai, the association has applied to the Brihanmumbai Municipal Corporation (BMC) for clearance at Jhaveri Bazar with an alternative option at Bandra Kurla Complex (BKC), where diamond traders have opted for a site.

However, Hundia is doubtful of getting clearance at either places because of space constraints at Jhaveri Bazar and the problem of shifting to BKC.

"In addition to about 1,17,000 workshops and 16,000 offices and showrooms, there are about 2,80,000 Bengali workers at Jhaveri Bazar. Shifting all of them to BKC would be a Herculean task," said Hundia.

There are no monetary constraints, but providing residential quarters to all the workers is a major challenge, he added.