| AJAYAN
AHMEDABAD, APRIL 21: The National Multi-Commodity Exchange will introduce 'ready delivery contract' on a T+2 basis for three commodities in a fortnight, according to managing director Kailash Gupta.
Mr Gupta said the ready contracts with electronic settlement for rubber, pepper and cardamom would be on the lines of the T+2 delivery system in the equity market. This revolutionary step would give an impetus to trade flow in commodities, he said.
The delivery through the exchange's online trading platform should help eradicate spot trading rigidities and integrate various layers of small stakeholders of intermediaries between farm and factory. A well-integrated spot market was a pre-condition for developing a successful commodity futures market, he said.
Such a system is an attempt to integrate the spot market with the derivatives and futures market. It is to be noted that the stock margins are less than that of the derivatives.
The software for the system is ready and will be introduced in rubber, pepper and cardamom, the three main commodities traded on the exchange. The delivery system through the warehouse receipts, which ensured adequate stocks in the warehouses should see the system turn successful. Based on the success in these commodities, the exchange will consider extending the facility to other commodities, he added.
Farmers will be the biggest beneficiaries and will not have to go in for distress sale. About the amount of deliveries expected, he said it would be finally around 30% with the remainder being squared off. He added that there was little chance of cornering or a squeeze in the market.
The clients will have to pay an upfront margin on all open positions at the end of the trading day to avoid the risk for two days. This will be released after two days against pay-in and pay-out of settlement. The contract specifications, price quotation and trading unit will be same as the futures contract of these commodities.
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