NCDEX plans to launch spot exchanges

India’s largest commodity exchange, National Commodity and Derivative Exchange of India, is planning to launch spot exchanges on the electronic platform in different states.

India’s largest commodity exchange, National Commodity and Derivative Exchange of India (NCDEX), is planning to launch spot exchanges on the electronic platform in different states. Currently, trades at the spot market, which is controlled by state governments, are executed through open auctions.

‘‘We are in advanced talks with many states and are expecting to receive approval from at least three states initially. We want to revolutionise the fragmented spot market trading in the country,’’ said Sanvali Kaushik, Vice President, Products, NCDEX.

The exchange is exploring different models of trading like delivery at buyers/sellers godown, as-and-where basis, etc. The prices of the product may wary according to traders’ choice.

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The trades on newly-formed spot exchanges will be executed electronically on the basis of demand and supply. ‘‘To avoid defaults, we are also considering collecting performance-based margins from both buyers and sellers,’’ said Kaushik.

The spot markets at present are governed by state APMCs (Agricultural Produce Marketing Committee). Till date, none of the states have an agency to disseminate authenticate spot prices which impacts product prices on futures markets. Commodity exchanges have appointed various sources to poll prices from major local traders to arrive at spot prices.