Commodities Exchange in India

Commodities (commodity) are basic raw materials and foodstuffs such as metals, petroleum, coffee, grain etc. Commodities are traded on a commodity exchange both by the companies that use them (e.g. chocolate manufacturers) and by speculators. Futures contracts allow commodity producers and commodity users to bring some predictability and stability to pricing. By buying futures contracts, they can hedge against underlying price changes in the commodity.

Commodity exchange are the  exchanges where the trading of futures and forwards take place, basically commodity exchange  are trading  in future contacts on those  commodities  which have some  regional  relevance it is  not going  to be as easy  as a share  of a company  to get  listed  in a different exchange.

Commodity exchanges in India are expected to contribute significantly in the strengthening Indian economy to face the challenges of globalization. The Commodity Exchange makes commodity money available to all as a medium of exchange, store of wealth and unit of account. As long as the commodity exchange does not provide credit or interest, it is easily established and avoids banking regulations. As a barter exchange mechanism, there is no fiduciary responsibility. With the value India commodity economy being around Rs 300,000 crore a year

Delivery of commodity is a physical activity in which the Commodity exchange members are stakeholder in those commodities.  Importance of commodity exchanges are linked to the stake holders of that particular commodity

Introduction To Commodity Exchange

Virtually all of the futures exchanges in the United States date from the late nineteenth or early twentieth century. They all started as commodity exchanges, but since the early 1980s trade in financial futures has become more and more important for most of them. Until 1998, the Chicago Board of Trade used to be the worlds largest futures exchange, but is now the second-largest place with a volume of 255 million contracts in 1999  (11 per cent of total world volume). The Chicago Mercantile Exchange, the worlds fourth-largest, accounted for about 8.5 per cent of world volume, while the New York Mercantile Exchange (former NYMEX and COMEX), the worlds eighth-largest, accounted for more than 4 per cent. Among the large exchanges, NYMEX is the only one trading solely commodities, and is the world’s largest commodity exchange. Two years ago, the CSCE, NYSE and NYCE merged to form the New York Board of Trade which was in 1999 the world’s twentieth-largest exchange. Up to 1993, the United States exchanges used to account for the major part of world futures and options trade.

Commodity futures markets have a long history in India. The first organized futures market, for various types of cotton appeared in 1921. In the 1940s, trading in forward and futures contracts as well as options, was either outlawed or made impossible through price controls. This was the situation until 1952, when the Government passed the Forward Contracts Regulation Act, which to this date controls all transferable forward contracts and futures. During the 1960s, the Indian Government either banned or suspended futures trading in several commodities. The Government policy softened in the late 1970s and recommendations to revive futures trading in a wide range of commodities was made. With the full convertibility of the rupee, the ongoing process of economic liberalization and the Indian economy’s opening to the world market; the role of futures markets in India is being reconsidered. Most of contracts being traded are unique in the world. Although some are clearly domestic oriented, others (such as raw jute, pepper, and oilseeds) have the potential to become of regional or even international importance. The first new contract allowed was an international pepper futures contract in Cochin officially launched in 1997. In the Philippines, the Manila International Futures Exchange was active from 1985 to 1996, but was then closed down by government regulators.

Nation-Wide Multi Commodity Exchange

These Associations/Exchanges are at different stages of completing the procedural formalities for setting up the exchange/commencing trading. After assessing the market situation and taking into account the recommendations made by the Board of Directors of the Exchange, the FMC prescribes various regulatory measures from time to time, for prudential regulation of futures/forward trading. Govt. has recently removed prohibition on further 81 more items, thereby removing prohibition on all commodities.  Similarly NTSD Contracts in commodities are also taken out of the purview of FC(R) Act. .Under a World Bank aided Grant Scheme to support development of commodity futures markets in India, a number of consultancy assignments, training program, study tours, office automation of FMC etc. have been undertaken.  The project was successfully completed on 31st October, 2000.  A Plan Scheme under the 10th Five Year Plan for generating awareness about the activities, mechanism and benefit of futures trading among farmers is being implemented. In enhancing the institutional capabilities for futures trading the idea of setting up of National Commodity Exchange(s) has been pursued since 1999. Recently on the basis of comprehensive examination of various applications/expressions of interest received from 16 parties, four exchanges/proposed exchanges have been identified for giving the “National Status”.  While the Online Commodity Exchange of India Ltd (OCEIL) ( later on renamed as National Multi-Commodity Exchange of India Ltd., NMCE)  has been given final approval, others  National Board of Trade (NBOT), Indore, National Commodity & Derivatives Exchange  (NCDEX), Mumbai,  and Multi Commodity Exchange (MCX), Mumbai have  been given in-principle approval.  “National Status” implies that these exchanges would be automatically permitted  to  conduct futures trading in all approved commodities,  exempting   sensitive items such as rice, wheat, gold & silver, subject to clearance of  bye-laws and contract specifications by the FMC.  While the NMCE, Ahmedabad has commenced futures trading in November, 2002, and NBOT, Indore has been trading as a regional   exchange since 2000, its up-gradation to national level and NCDEX and MCX, Mumbai commencing operations etc.

Indian Commodity Exchanges

Commodity trading in India is regulated by the Forward Markets Commission (FMC) headquartered at Mumbai, it is a regulatory authority which is overseen by the Ministry of Consumer Affairs and Public Distribution, Govt. of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952.

List of major commodity exchanges in India:

1. Bhatinda Om & Oil Exchange Ltd., Batinda. Gur
2. The Bombay Commodity Exchange Ltd.Mumbai RBD Pamolein, Groundnut Oil, Sunflower Oil, CottonSeed, Safflower, Groundnut, Castor oil-Int’l, Castorseed, Cottonseed oil, Sesamum oil, Sesamum OilCake, Safflower, OilCake, Rice Bran, Rice Bran Oil, Rice Bran OilCake, Safflower Oil, Crude Palm Oil
3. The Rajkot Seeds oil & Bullion Merchants` Association Ltd Groundnut Oil, Castorseed
4. The Meerut Agro Commodities Exchange Co. Ltd., Meerut Gur
5. The Spices and Oilseeds Exchange Ltd. Turmeric
6. Ahmedabad Commodity Exchange Ltd. CottonSeed
Castorseed
7. Vijay Beopar Chamber Ltd.,Muzaffarnagar Gur
Mustard Seed
8. India Pepper & Spice Trade Association.Kochi Pepper Domestic-MG1
Pepper Domestic-500g/l
Black Pepper Int’l-MLS ASTA
Black Pepper Int’l-VB ASTA
Black pepper Int’l FAQ
Pepper 550 G/L
Rubber RSS4
9. Rajdhani Oils and Oilseeds Exchange Ltd.  Delhi Gur
Rapeseed/Mustardseed
10. National Board of Trade. Indore. Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Soy bean
Soy Meal
Soy Oil
Crude Palm Oil
11. The Chamber Of Commerce.,Hapur Gur
Rapeseed/Mustardseed
12. The East India Cotton Association Mumbai. Indian Cotton
13. The Central India Commercial Exchange Ltd, Gwaliar Gur
Rapeseed/Mustardseed
14. The East India Jute & Hessian Exchange Ltd, Hessian
Sacking
15. First Commodity Exchange of India Ltd, Kochi Copra
Coconut oil
Copra cake
16. Bikaner Commodity Exchange Ltd.,Bikaner Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Guarseed
Gram
GuarGum
17. Esugarindia Limited. Sugar Grade – M
Sugar Grade – S
18. National Multi Commodity Exchange of India Limited. Gur
RBD Pamolein
Groundnut Oil
Sunflower Oil
Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Soy bean
Soy Oil
Copra
CottonSeed
Safflower
Groundnut
Sugar
Sacking
Coffee-Robusta Cherry AB
Coconut oil
Castorseed
Castor-oil
Groundnut oilCack
Cottonseed oil
Sesamum (Til or Jiljili)
Sesamum oil
Sesamum OilCake
Safflower OilCake
Rice Bran Oil
Safflower Oil
Sanflower OilCake
Sunflower Seed
Pepper
Crude Palm Oil
Guarseed
CastorOil Cake
Cottonseed – Oilcake
Aluminium Ingots
Nickel
Vanaspati
Soybean Oilcake
Rubber
Copper
Zinc
Lead
Tin
Linseed
Linseed Oil
Linseed Oilcake
Coconut Oilcake
Gram
Gold
Silver
Rice
Wheat
Cardamom
Kilo – Gold
Masoor
Urad
Tur / Arhar
Moong
Rapeseed – 42
Raw Jute
Coffee-Arabica Plantation A
19. Surendranagar Cotton oil & Oilseeds Association Ltd, Kapas
CottonSeed
Cottonbales
20. Multi Commodity Exchange of India Ltd. Gur
RBD Pamolein
Groundnut Oil
Rapeseed/Mustardseed Oil
Pepper Domestic-MG1
Soy bean
Kapas
Soy Meal
CottonSeed
Turmeric
Castorseed
Castor-oil
Crude Palm Oil
Guarseed
Cottonseed – Oilcake
Nickel
Rubber
Copper
Tin
Gram
Sugar Grade – M
Sugar Grade – S
Gold
Silver
Gold-M
Rice
Wheat
Ref Soya oil – Indore
Urad
Tur / Arhar
GuarGum
Castorseed-5
Silver-M
Steel – Flat
Steel – Long
Yellow Peas
Long Staple Cotton
Medium Stapple Cotton
Castorseed – Disa
Mustard Seed
Guarseed Bandhani
Gold – HNI
Silver – HNI
Red Chilly
Maize
Guar Gum Bandhani
CASHEW KERNEL W320
Basmati Rice
Jeera
Mustard Seed Jaipur
Crude Oil
Sarbati Rice
Sesame Seed ( Natural 99.1)
Cotton Long Kadi
Cotton Med Abohar
Cotton Short Staple
Steel Long Bhavnagar
Mentha Oil
21. National Commodity & Derivatives Exchange Ltd. S06 L S Cotton Ahmedabad
J34 M S Cotton Bhatinda
Crude Palm oil – Kandla
RBD P’Olein – Kakinada
EXP R/M oil – Jaipur
Rape/Mustard seed – Jaipur
Ref Soya oil – Indore
Soy bean – Indore
Pure Gold – Mumbai
Pure Silver – New Delhi
Pure Gold – Mumbai – 1 Kg
Pure Silver – New Delhi – 30 Kg (Mega)
Rubber – Kottayam
Pepper – Kochi
Gram(Chana) – New Delhi
Guarseed – Jodhpur
Jute (B twill-665 Gms) – Kollata
Turmeric – Nizamabad
Castorseed – Disa
Raw Jute – Kolkata
GuarGum – Jodhpur
Sugar M Grade – Muzaffarnagar
Urad – Mumbai
Sugar S Grade – Vashi
Yellow Peas – Mumbai
Wheat – New Delhi SMQ
Soy Meal – Indore
SONA995MUM
CHANDIDEL
CottonKadi
CottonAbohar
Gur-chaku – Muzaffarnagar
Yellow Red Maize – Nizamabad
Grade A Raw Rice Delhi
Grade A Parboiled Rice Delhi
Common Raw Rice Delhi
Common Parboiled Rice Delhi
Mulberry Raw Silk
Mulberry Green Cocoons
Jeera Unjha
Chilli (Paala) Guntur
Mild Steel Ingots – Ghaziabad
Cashews W-320-Kollam
Whitish Sesame Seed – Rajkot
Cotton Seed Oilcake – Akola
Lemon Tur – Mumbai
Maharashtra Lal Tur – Akola
Arabica Coffee – Hassan
Robusta Coffee – Kushalnagar
22. Haryana Commodities Ltd., Hissar Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
23. The Bullion Association Limited
24. e-Commodities Ltd

Source: Scribd.com

Bookmark the permalink.