Safal Exchange to start national operations soon

The Safal National Exchange of India (SNX), a 51:49 joint venture between the Multi Commodity Exchange (MCX)-Financial Technologies (FTIL) combine and the National Dairy Development Board (NDDB), is likely to start operations in two months with its headquarters in Bangalore.

The SNX would be the first of its kind in the country to offer nationwide spot sales of perishable commodities online. Currently, NDDB is selling dairy products and other perishable commodities in Bangalore with limited reach but the launch would enable the regional exchange to get national reach with one spot sale of commodities at an uniform price.

According to sources, NDDB would provide the network and infrastructure while MCX-FTIL combine would ensure terminal availability and execution of orders among traders.

Under the agreement, MCX would provide terminals on a common spot where traders can come without the goods and check the current prevailing prices, said MCX Joint Managing Director Lamon Rutten.

This exercise would eliminate handling of perishable items and also help them understand how profitable business could be, Rutten added.

According to market sources, 15-20 per cent of the total perishable commodities get spoiled because of poor handling and storing capacities in India. But, the new system would help boost efficiency with minimum level of spoilage.

When asked about initial investment MCX is planning to make on this project, Rutten said, "The investment on this project is an ongoing process and nothing like one-stop shop. Hence, we have not yet chalked out any on the spot investment strategies."

The leading commodity exchange in India is trying to avail the well-equipped infrastructure of NDDB that requires no amendment of the Agriculture Produce Marketing Committee (APMC) Act. In fact, the National Spot Exchange, a spot trading arm of MCX, has been awaiting amendment of the APMC Act for the past two years to initiate online spot trading throughout the country.

MCX is planning to launch its own spot commodity exchange by the year-end. "The market yard of Safal is in operation. So, there is no need to get separate permission from the respective authorities. We are just upgrading it to the national scale from regional," Rutten said.

The exchange would have numerous time-to-market advantages as NDDB has obtained approvals from a number of states to set up horticulture markets.

NDDB has been successfully providing synergies between producers and consumers of dairy, horticulture and other products for the last three decades without any interruption at equitable prices.

The SNX, in turn, would provide online trading facility to farmers, milk producing organisations and traders across the country take full advantage of price, demand and supply data dissemination and make decisions accordingly, a trader said.