The National Commodities and Derivatives Exchange of India (NCDEX) has launched contracts in gold (1 kg) and silver (30 kg) with new specifications aiming at facilitating international arbitrage and improve the platform for genuine hedgers by ensuring deliveries. | |
| The new contracts will operate as two bi-monthly contracts at a time, rather than the current system of three monthly contracts trading at a time. |
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| The purity level of gold has also been changed to 995 instead of 9999 level and in the case of silver the purity level would remain the same at the 999 level. |
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| "The contracts are designed to suit the actual trade taking place and is more in line with international markets. This is expected to increase the liquidity and the volumes in the bullion futures trade," said Shrikant Subbarayan, head of products, NCDEX. |
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| The contracts would now expire on the seventh of every month. The exchange launched contracts expiring on December 7, 2004, and March 7, 2005, and will subsequently launch more contracts. |
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| NCDEX is also introducing a delivery period for the contract, whereby before the first of every month the sellers without intention to deliver would roll over their positions to the subsequent available contract. |
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| Subbarayan said margins on deliveries are also expected to be higher between 20 per cent and 25 per cent. In comparison the trading margins would be roughly 4 per cent to 5 per cent depending on the volatility. The margins would be approved by the relevant authority of the exchange. |
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| Over and above this, the penalties on failure to deliver are also in place. The contracts offered in gold will be starting from December, and continue to February, April, June, August and October and the silver contracts will be for March, May, July, September and December. |
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