NMCE India, Agricultural Commodity Trading growth

With growing interest in the markets for agricultural commodities, NMCE India is sure to be an exchange of merchandise to follow closely.

National Multi Commodity Exchange of India Limited (NMCE) was established in 2002 as the first electronic commodity exchange in India countrywide.

It was promoted by a number of organizations of the most important raw materials, including Gujarat State Agricultural Marketing Board and national agricultural cooperative Marketing Federation of India.

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A remarkable feature of NCME India is that it does not carry any debt and so can claim to be built on a very solid financial base and prudent.

It has a number of major strategic equity holders, three of whom are Neptune Overseas Limited, Punjab National Bank and central warehousing corporation.

Since NMCE is exchanging goods only Indian without foreign investment partners, is actively looking at bringing aboard some strategic investors from USA, United Kingdom and Japan, which could build a presence in the markets of raw materials.

The Exchange has reinforced its credentials as a marketplace of quality raw materials, after quality accreditation ISO 001: 2000 by BSI. NMCE India has about 300 members and is trying to expand this.

Which raw materials are exchanged on National Multi Commodity Exchange of India Ltd.?

Among the metals, there are futures contracts for copper, lead, nickel, Tin, zinc, silver, aluminum and gold (1 kg, and 100 g yellow metal contracts).

NMCE India also has a very large portfolio of raw agricutlural available for electronic commerce, including rice, Arabica coffee, rubber, menthol and guar gum.

Within the agricultural sector, there are also vegetables like Charma, Moong, Masoor, together with spices such as turmeric, cumin seeds, cardamom and pepper.

Various oils are traded here, too, such as from castor oil, coconut, peanuts, cottonseed, Sesame and flax, palm, and most of these oils are also listed as seed and in the form of a cake.

Trading system and risk management

For commodity traders, trying to trade on this e-commerce platform, you want to know that the system is robust and well tested.

The platform is a derivative Trading Settlement System (DTSS) provided by CMC markets. The Exchange makes use of the best systems international risk management with the ability to handle spikes in volatility, as intra-day clearing and settlement.

In every market, traders must have confidence in the clearing and settlement system and NMCE India are very confident in the strength and effectiveness of their system.

Warehouse system

NMCE, according to traders who take delivery can have full confidence in treatment effectiveness of their businesses through the warehouse receipt system.

Warehouses are strategically located in major centres across several States, including Gujarat, Ahmadebad in Bangalore (Karnataka), Chennai (Tamilnadu) and Delhi (uttar Pradesh).

What kinds of markets are available at NMCE in India?

The futures market is used as a vehicle to cover primary producers and consumers, as well as for the speculation, where in most cases, the participant will not take over but settles in cash. In case a contract is due for delivery, but was not closed, it should resolve through the warehouse receipt system.

Besides the futures trading there is also a money market that lasts for an hour every day and is constant on the same day. There is also a spot market trade, which is open for 2 hours a day, where the settlement is on the third day after the transaction.

There is also a weekly market that settles on the fifth day from the day of trade, while the markets where delivery is more than 11 days after the transaction (but not the futures markets) are specific terms as regards the date of assessmentquality and delivery.

Another key difference here is that while futures contracts there is anonymity, these specific agreements with contractors are known to each other.

Looking Forward

With the changing dynamics of global markets of raw materials, particularly in agriculture, it is likely that India will see further expansion NMCE and strategic partnerships going forward, as with a growing global demand for raw materials seems likely to continue increasing in the long term.

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