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After receiving good feedback from the market, the National Commodity and Derivatives Exchange (NCDEX) is looking to add more commodities in the mini contract segment.
“Mini contracts were launched by the exchange to give retail investors an opportunity to include commodities in their portfolio in a simpler, easy–to-understand manner. Going forward, the exchange plans to launch mini contracts selectively in some of the more liquid contracts subject to regulatory approval,” said Suresh Devnani, business head, NCDEX.
The exchange has five active mini contracts in agri commodities and two in non-agri commodities, which have generated good trading volume. The two-tonne contracts were launched in chana, castor seed and guar seed. RM Seed and soybean contracts were added after receiving enthusiastic market feedback. In non-agri commodities, it has gold and silver mini contracts.
“The objective behind introducing the mini segment was to extend the reach of commodities to retail investors who shy away from the markets and perceive commodities to be a high-risk, high-investment avenue. The segment is an attempt to make commodities an inclusive asset class,” said Devnani.
The exchange has seen 5,000 new clients trade in minis on the exchange platform with 270,000 lots traded in this segment since it started.
To promote the mini contract segment, the online commodity exchange is working closely with its members and industry bodies such as Commodity Participants Association of India (CPAI) to reach out to the retail investors and educate them about the benefits of diversifying their portfolio. It is also spreading awareness through investor programmes, workshops, posters, mailers, and advertorials in newspapers.
“Mini contracts are an extremely useful tool for portfolio diversification for retail investors. They are also beneficial to small traders, who prefer smaller-sized contracts with lesser margin requirements,” said Devnani.
