The Hindu Business Line : NCDEX to begin spot trading

The National Commodity and Derivatives Exchange (NCDEX) will roll out its agri-commodity spot exchange in West Bengal and Rajasthan next month. National Collateral Management Services Ltd — the NCDEX arm set to spearhead the spot market foray on behalf of the group — has received approval from the Rajasthan Government and an in-principal approval from the West Bengal Government.

"We have received support from both the state governments and will roll out the spot market in both states in November," Mr P.H. Ravikumar, Managing Director and CEO of NCDEX, told Business Line.

The exchange is planning a selective approach to roll out the physical trade that, unlike the futures, will require substantial logistics support. A faster settlement cycle coupled with the diverse nature of settlement and other inter-state and intra-state trade practices makes the launch of a physical market in agri-commodities a difficult proposition altogether.

Priority commodities

While commodities such as guar seed and Bengal gram which are produced locally are high on the agenda for spot market in Rajasthan, in Bengal, rice, jute and potato are on the priority list for both spot as well as futures market.

"We are exploring possibilities of launching futures on a number of commodities produced in West Bengal," Mr Ravikumar said.

Potato futures

Though he did not confirm inclusion of any commodity in the futures market offerings, market sources aver that the exchange had recently studied the prospects of launching forward contracts on Bengal's potatoes.

Though a similar exercise was carried out on rice, availability of a large number of rice varieties within the state has proved to be a stumbling block in working out with a broad-based contract.

Incidentally, the existing forward contracts floated by NCDEX on rice varieties available in North India are yet to generate adequate liquidity.

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