| AJAYAN
KOCHI, JUNE 5:
The first of the e-spot daily contracts for rubber and pepper will begin on Tuesday. Armed with the Forwards Market Commission (FMC) approval, the National Multi-Commodity Exchange (NMCE) is to officially launch this one-day standardised forward contracts, besides its specific delivery contracts, according to Kailash Gupta, the exchange managing director.
Similar to the stock market, the commodity market too would now have an anonymous electronic order-driven spot market. There would be mandatory physical delivery for all net open positions. Like in the stock market, delivery would be based on a T+2 format, delivery to be made in the next two days, Mr Gupta said. Like other future contracts, here too there would be methods for price discovery and squaring off of positions, but with delivery of net open positions.
Mr Gupta said the markets in ready contracts in India were fragmented and complex and dominated by small players at farm level. Poor warehousing techniques and inadequate warehousing infra-structure along with absence of popularity of negotiable warehouse receipts resulted in waste of raw produce.
The grades and qualities differed from location to location, making the drawing of basis prices of a standardised futures contracts difficult.
Launching of T+2 basis contract would help overcome the difficulties of not having an organised vibrant nationwide contract-based spot commodity market, he added.
Meanwhile, UN-supported Common Fund for Commodities (CFC) had evinced interest in the activities of the exchange and would be holding a series of talks with exchange officials soon, Mr Gupta added.
CFC which was funding a project for pest control in coffee was aiming at large-scale capacity-building, including Africa, and would be seeking the support of NMCE. A team of CFC officials is expected to visit the exchange soon, he added. |