The National Commodity & Derivatives Exchange Ltd (NCDEX), India’s second-largest commodity exchange, has inked a “Head of Terms” agreement with the Singapore Commodity Exchange (SICOM) to develop contracts for trading and clearing in both derivative platforms.
According to the terms of the agreement, both exchanges will co-operate and enhance the development of their respective commodity markets. In addition, NCDEX will make available its agricultural commodity index to SICOM to create derivative products.
This would make SICOM the first exchange outside Singapore to trade NCDEX’s products and NCDEX the first exchange outside India to trade SICOM’s products.
Further areas of collaboration include development of new products, information exchange, market research and facilitation of cross-membership access. These initiatives will require regulatory approvals.
“We will understand the commodities that are highly active at SICOM and also provide the exchange knowledge of agri commodities that are liquid at NCDEX. If the contract suits the Indian conditions, we will seek regulatory approval to facilitate trading by our members,” said Unupom Kausik, chief business officer of the NCDEX.
At present, the NCDEX facilitates 52 products for trading, of which 15 are highly liquid. At SICOM, however, only two products, Ribbed Smoked Sheet (RSS) 3 and Technically Specified Rubber (TSR) 20, are highly traded.
“Similarly, if they want to launch our products after evaluating the pros and cons, they will be open to do so,” Kausik said.
SICOM TSR20 is the only active TSR20 rubber contract in the world. NCDEX has accredited over 1.3 mn tonnes of warehousing capacity and facilitates deliveries of around 40,000 tonnes of agricultural commodities every month.
