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NCDEX to begin spot trading in farm items soon

CHENNAI: The National Commodity and Derivatives Exchange Ltd. (NCDEX), an online multi-commodity exchange, is planning to commence spot trading in agricultural commodities by October. The company has floated a 100 per cent subsidiary, NCDEX Spot Exchange Ltd., for this purpose.

Addressing presspersons here on Saturday, R. Ramaseshan, MD& CEO, said the company had approached several state governments for permission to begin spot trading. To start with, the company would start spot trading in a few commodities in Maharashtra, Karnataka, Kerala and Bihar. In many states, the APMC (agricultural produce marketing committee) Act, which prohibited transactions outside the mandis, had been amended, enabling farmers to sell their produce in open markets. There was no APMC Act in Kerala and the Bihar Government had already suspended the Act, Mr. Ramaseshan said.

NCDEX Spot Exchange has an authorised capital of Rs. 5 crore. This would be increased to Rs. 50 crore soon. “Though funding is not a problem, we may invite strategic investors to invest in the company by offering equity stake,” Mr. Rameseshan said.

The spot market, which would be a delivery-based market, would help farmers to assess realistic prices for their produce, he said.

The present outcry system in many mandis, he said would not help a farmer to know the correct price for his produce. The electronic exchange such as NCDEX, however, would help them to discover the prevailing prices.

Mr. Ramaseshan was here in connection with a workshop on hedging organised by NCDEX, in association with Institute for Financial Management and Research (IFMR) and PJ Commodity Ventures, on Saturday.

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