Small comexes wary of exiting regional domain

Regional commodity exchanges are not really keen on widening their horizon by going online or launching new commodities on their platforms, to keep pace with national bourses as they fear that they may lose their identity and business in the long run.

The concern of regional comexes is not out of place given that the Forward Markets Commission (FMC) asked them to upgrade themselves for online trading in order to bring commodities of their interest for national trade.

The commodity markets regulator, along with the all-India level exchanges, has been making efforts to bring the regional bourses to the national platform.

In this regard, it has already offered its multi-purpose assistance, which includes modern technology and training programmes to educate the members of the small bourses, among others. But regional comexes have not shown any interest in availing of their support or assistance for upgrading their operations.

"FMC's this initiative is hardly going to benefit to regional exchanges. This is a step towards closing down regional exchanges. For launching new commodities, regulations are so tough that regional commodities exchanges would not be able to fulfil and automatically be closed down," feels Shyam Agarwal, CEO, Rajdhani Oils and Oilseeds Exchange.

P H Ravi Kumar, MD and CEO, National Commodity & Derivatives Exchange, however, said a couple of regional commodity exchanges had approached the exchange for technological assistance, and "we are very keen on supporting them. Though a final call on the matter has not yet been taken, it is expected very soon".

Kailash Gupta, MD, National Multi Commodity Exchange (NMCE), said he was facing a "duplication problem" with some regional exchanges.

"Regional exchanges want NMCE to stop trading in commodities that they are dealing in. But this is impossible. Negotiations are on for finalising modalities to resolve the issue," he said, without divulging the names of the exchanges in question.

Jignesh Shah, MD, Multi Commodity Exchange, has also confirmed enquiries from regional exchanges. However, national bourses' efforts seem to be "falling in no man's land" as most of the regional bourses are facing a financial crisis which, they say, none of the national players can sort out.

"National exchanges have their own interest in making money from technology supplies and special margins to be levied on trades done at our exchanges. We should not let them go stronger at our cost," said Kaushik Shah, president, Ahmedabad Commodity Exchange.

"Looking at the experience at Rajdhani Oils and Oilseeds Exchange and Bombay Commodity Exchange, it is very difficult to allocate fund for ruining ourselves. We are getting smooth business through local mandis and, hence, require no technology upgrade at all," Shah added.