NCDEX keen on gold refining

National Commodity and Derivatives Exchange (NCDEX) has started talks with Birla Copper, Reserve Bank of India (RBI) and Minerals and Metals Trading Corporation (MMTC) for necessary permissions to kick off refining of gold.

This would lead to growth in volume of bullion traded on exchanges. Narendra Gupta, chief business officer (CBO) of NCDEX, said the move would also help unlock the huge volume of gold locked up in assets in India.

"According to one estimate, Indians possess 20,000 tonnes of gold which is not being traded. To enable people to trade in that gold, stringent quality specifications have to come in. This can only be done by melting and refining the metal," he said.

At present, there are no NCDEX certified refiners in the country. The exchange allows trade in imported gold held by custodians nominated by the exchange. Traders get a coupon against the physical gold for submission to depository participants.

Indigenous refining would attract a large number of participants to the trading ring. The strategy is in line with global practice followed by commodity exchanges like London Bullion Exchange (LBA). Only gold of not less than 0.995 fineness bearing serial number and identifying stamp of a refiner approved by NCDEX can be traded at present.

To synchronise Indian trading times with global markets in London and New York, NCDEX is also considering evening trade in bullion. "We are exploring this option. It should be available very shortly," Gupta noted.

Trading on internet would be available by end-February and is expected to widen participation. Brokers will issue passwords to traders.

INSET

Gupta expressed hope the exchange would be able to log Rs 100 crore volume by end of March. At present, the average daily turnover hovers around Rs 20-25 crore. Gupta informed many new items like pepper, castor oil, guar, tea, coffee, jute, ferrous and non-ferrous metals would be added in the list of traded commodities on NCDEX.