Ncdex set to launch e-spot market by Nov

The electronic spot exchanges planned by the National Commodities and Derivatives Exchange (Ncdex) is likely to become operational in November.

"We are in the final stage of getting regulatory clearance from the governments of Maharashtra, Rajasthan, Kerala and West Bengal and hope the spot exchanges to become functional by November", said Mukund S Annigeri, head of spot market, Ncdex.

"With the launch of these spot exchanges, greater transparency would be induced in commodities trading," said Annigeri.

In Rajasthan, the exchange is likely to take up spot trading in commodities such as mustard, pulses and guarseed, while in West Bengal it would be trading in jute, potatoes and rice.

Gradually, all the commodities traded at its futures exchange would be traded on spot exchange well. With the help of these exchanges, farmers in one state would be able to reach out to markets in other states and auction his produce.

His price realisation would improve significantly. For the members of the exchange it would be possible to take delivery in the spot market and hedge in futures market within a single exchange. The spot exchange is expected to supplement and complement the futures market of Ncdex.

"We are also following with the government for the introduction of options in the Indian commodity exchanges", said Annigeri.

At present options trading in commodities is not allowed under the Forward Contract (Regulation) Act, 1952. The amendment of this Act is due. The amendment may lead to the introduction of options trading in commodities.

An option contract is the right (but not the obligation) to purchase or sell a certain commodity at a pre-arranged price on or before a specified date.

For this contract, the buyer or seller of the option has to pay a price to his counterpart at the time of contracting. It is called premium. If the option is not used, the premium is the maximum cost involved.