NCDEX modifies Silver International contracts to suit local hedgers

The National Commodity and Derivatives Exchange (NCDEX), the leading agri futures trading platform, has modified its Silver International contracts to suit Indian hedgers and speculators. The move aims to attract more participation in the non-agri segment, which is currently negligible.

The modification in contract has already got approval from the Forward Markets Commission, the commodity derivatives market regulator.

The exchange, in a circular dated July 20, has announced that Silver International contracts would not attract bank premium and Customs duty, unlike in the past. Contracts expiring in August 2011, November 2011 and February 2012 with modified specifications would be available for trading from July 21. Thereafter, contracts will be launched for further expiries.

Bank premium on silver currently ranges at 15-30 cents while Customs duty works out to Rs 1,500 a kg.

“Doing away with the afore mentioned two components means silver contracts on the NCDEX will be quoted lower than the prevailing prices for contracts expiring the same months on other exchanges,” said Naveen Mathur, associate director (commodities and currencies), Angel Broking. NCDEX has also changed the settlement practice with this revision. From the basis of prices five day prior to the expiry date earlier, the contract will be settled on a spot price basis on the expiry day.

“We used to pole international prices five days before the contract expiry date, which was a hectic practice. But, now it will be one price for expiry,” said an exchange official.