NCDEX to launch spot markets

The National Commodity & Derivatives Exchange (NCDEX) is ready to launch spot markets along with 563 physical delivery centres across the country.

The spot markets would be launched under the new company, the NCDEX Spot Exchange, and may include bullion spot markets and currency trading at a later stage, an NCDEX official said, expressing his hope of launching the spot markets within a month.

"Earlier, we had planned to launch the spot markets in Bihar. But the plan had to be postponed because of flooding. Now we are considering Andhra Pradesh, Karnataka, Kerala and also Bihar for the launch. Moreover, we are planning to launch bullion spot markets also. It will be a part of the NCDEX Spot Exchange and traded on the same platform," said, Shrikant Subbarayan, Chief Business Officer, NCDEX.

Subbarayan added that there were only two physical delivery centres at present, which includes Ahmedabad and Mumbai.

"We have received recommendations on at least 20 physical delivery centres across the country. All we need to do is to tie up with a bank to use its vaults. This will enable us to provide physical deliveries," he said.

"We are awaiting revisions in the Forward Contracts Regulation Act (FCRA) so that we can also introduce weather and index trading. For weather trading, we already have the necessary infrastructure. We have around 180 weather stations to help farmers and traders in agri commodities.

These can be used in weather trading. We will not have a small climate exchange like they have abroad. But we will try to accommodate this in our existing platform. However, this can only materialise once the FCRA is amended," Subbarayan said.

The spot markets would not be under state Agriculture Produce Market Committees (APMCs) and would have a central licence, he said.

"We don't want to be tied up with thousands of state-level APMCs, since this would defeat the purpose of better price realisation. We don't need the infrastructure of APMCs as we already have our own existing infrastructure. We have more than one million tonnes of warehousing capacity and 563 warehouses across the country which will be increased when the need arises," he said.

The NCDEX will also introduce currency trading once the government gives the go ahead.

"Currency trading will require the government approval. The government can either facilitate it on commodity exchanges, as it is being done across the world, or on equity trading exchanges or they may propose a new vehicle for it," Subbarayan said.

Giving clarifications on the recent jeera controversy he said, "We have got many calls on inferior quality of jeera deliveries at Jodhpur. However, none of these calls can be taken as complaints as none of the traders have gone for testing the jeera. They are happily lifting jeera from Jodhpur centre. We have a free of charge testing facility there. If the trader feels that the quality of jeera is inferior than the grading given to it, they can always test it there. Many jeera traders from Unjha have taken deliveries without asking for tests. Some of them were the same traders who have raised the issue. Anyway, the FMC is investigating the issue and we our end are also investigating the whole matter."