Special Correspondent

Sets benchmark in online commodity trading

  • NMCE offers trading platform in 69 commodities produced in all parts of the country
  • Punjab National Bank formulates scheme for financing the Kerala produce

    KOCHI: Encouraged by the success of online trading in commodities for over four years, particularly in Kerala, National Multi-Commodity Exchange (NMCE) now plans to replicate the `Kerala model' in rest of the country.

    Kailash Gupta, NMCE managing director, told reporters here that the Exchange had rolled out the country's first transparent and effective electronic trading platform for commodities with a nationwide reach in November 2002. He pointed out that it was the members of the NMCE in Kerala who had seized the opportunity to the maximum advantage, contributing to the State's economy too.

    The NMCE now offered trading platform in 69 commodities produced in all parts of the country and traded by members hailing from all corners of the country. But over the years, Kerala carved a niche for itself, Mr. Gupta said.

    Kerala helped the NMCE improve upon and perfect the national benchmark it had set up earlier in the final settlement of all outstanding contracts at the time of expiry through robust and reliable Central Warehousing Corporation (CWC) receipt system, unlike other platforms where final settlement of outstanding contracts at the time of expiry was still muddled.

    He said the `Kerala model' was unique in the sense that it was a mix of growers, traders, brokers, investors, processors and exporter-importer - comprising both small and big players, hailing from big urban centres as well as from remote rural areas.

    Several farmers had been benefited by trading on NMCE terminals, Mr. Gupta pointed out.

    Answering a question, he said the `Kerala model' had been greatly appreciated by the regulator - Forward Market Commission - too in an implied way, he said. In Kerala there were players who invested their margin money with the aim of getting higher returns by any means and also those who used the potentials of these commodities markets for transferring the price risk, despite slightly conflicting objectives between the two types.

    Committee meet

    Earlier Mr. Gupta addressed a meeting of the NMCE committee on trading and settlement-related issues in which representatives from Delhi, Rajasthan, Mumbai, Kolkata and other places to Kerala attended. He recalled the olden days when commodities were traded through the `outcry' method at Indian Pepper and Spice Trade Association and the Coconut Oil Merchants Association.

    The small and big growers, investors, hedgers, traders and consumers in Kerala had been benefited by tapping the most efficient final settlement through sound and reliable warehousing delivery-based system, he said.

    The trading system attracted huge investment from other States on produces grown in Kerala.It also provided the Kerala growers and consumers an opportunity to trade in commodities produced in other States in India.

    Punjab National Bank formulated a unique scheme of financing the Kerala produce up to 90 per cent at an interest rate of 9 per cent per annum against CEC warehouse receipts accompanied with forward sale contract of the NMCE, Mr. Gupta told the meeting.

    Spot Exchange

    Talking to reporters here on Saturday night Mr. Gupta the NMCE was in talks with the Rajasthan Government on the desirability of opening a Spot Exchange for trading in commodities.

    He said the Agricultural Produce Market Committee Act needs to be amended for starting spot markets in commodities trading. The Rajasthan Government had shown some interest and talks were on in this regard, he said.

    He said the Central Warehousing Corporation (CWC) had recently hired a godown in Aluva which boosted the commodity trading in Kerala. The CWC warehouses in Kerala received record stocks of 10,535 metric tonnes of rubber and 6,727 metric tonnes of pepper on the NMCE account as on date. This was possible because of the creation of additional storage space in all CWC-designated warehouses in Kerala, hiring new godowns to cater to the unexpected piling of stocks.

    Total warehouse receipts in rubber, pepper, and cardamom issued by the CWC were 54,846, out of which 37,292 warehouse receipts had been delivered. There was not even a single instance of discrepancy in weight or quality, Mr. Gupta pointed out.

    Answering a question, Mr. Gupta said the NMCE was looking forward to a second Green Revolution through integration of market with technology, integration of `heavy and rigid' commodity economy to the `soft and weightless' world through modern practices.