NMCE launches gold guinea contract

The National Multi-commodity Exchange launched gold guinea futures contract.

The National Multi-commodity Exchange on Saturday launched gold guinea futures contract here and has roped in Kerala-based Muthoot Group to deliver its products from 22 centres across the country.

The country’s third-largest commodity exchange,which has a large presence in cash crops like rubber and some other farm items,seeks to cash in on the ‘safe haven’ status of gold as an investment instrument,and raise the share of bullion in its overall trade volume from the current 20 per cent.

Interestingly,though NMCE does not foresee direct competition from the country’s largest gold trading exchange MCX,saying it will only trade in the guinea segment as of now and not in the bulk gold category,it seems to vie for low-budget retail traders’ pie with light-weight guineas.

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“At the time of financial meltdown and crash in the stock markets,investors in general and small investors in particular have been looking for dependable and safe investment opportunity. Through this contract,we shall fulfill that need,” said NMCE Chief Executive Anil Mishra.

He,however,refrained from providing any projection as to how much the bourse is targeting in the next six months,saying “we want to stress on innovation,volume will follow”.

Launching the contract,Union Consumer Affairs Secretary Rajiv Agarwal said futures trade of bullion is fast catching up in the country while the volume of farm commodity is falling.

“In 2003-04,96 per cent of the futures contracts traded in the country were farm commodities. But by 2008-09,the share of agri commodities dipped to just 12 per cent.”

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“Through this contract,retail investors will be able to take advantage of future market for investing in gold,” said commodity market regulator FMC member Rajeev Kumar Agarwal.

Though Muthoot,which offers gold loans among other services,will deliver the guinea from 1,350 outlets across 22 cities,it plans to raise the number of centres,looking at the response for the product,its Managing Director George M George said.

Three of the four permitted contracts on the NMCE for delivery of eight-gram gold coins on December 09,January 10 and February 10 have been activated Saturday.

The contract for delivery on March 10 will get activated on December 1. Subsequently,trading in any contract month will open on the first day of the month and due date would be the last working day of its month of expiry.

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Gold guinea trading can be done between 10 am and 10 pm on weekdays on the NMCE,which may be extended to 11.30 pm soon,Mishra said. However,trading can be conducted only from 10 pm to 2 pm on every Saturday.