NSE enters commodity derivatives trading biz with gold and silver contracts

Introduces two contracts in gold - 1 kg and 100 gm - to enable even smaller players to hedge their positions on NSE

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Mumbai: New logo of National Stock Exchange (NSE) displayed outside the headquarter, in Mumbai on Thursday, August 16, 2018. Photo: PTI

Dilip Kumar Jha Mumbai

Last Updated : Oct 13 2018 | 1:22 AM IST

India’s largest stock exchange the National Stock Exchange (NSE) has entered the commodity derivatives trading business with the launch of gold (1 kg and 100 grams) and silver contracts (30 kg).

The exchange has identified Ahmedabad as the base delivery centre with Brinks Arya as its delivery partner with some own vaults in place. Also, NSE is planning to expand the delivery base to reach out to small- and medium-sized jewellers across the country.

“Our aim is to develop the ecosystem to facilitate trading for all players in this trade. Hence, we have launched two contracts in gold (1 kg and 100 gm) to enable even smaller players to hedge their positions on NSE. We are also preparing our strategy to bring in corporate participation on our platform,” said Vikram Limaye, Managing Director and Chief Executive Director, NSE.

The exchange has also applied to Sebi for approval of crude oil and copper contracts. NSE is evaluating options whether to enter into futures trading of these two commodities or their variants. In the second phase, however, NSE plans to launch agri commodities for which research is on advanced stage. On achieving the liquidity threshold, NSE will also enter into “options” of commodities being traded on its platform.

NSE has tied up with global leading exchange London Metal Exchange (LME) for using their reference price in the rupee term here. Apart from that NSE has also tied up with leading Indian associations to strengthen its ties in non-agri and agri space.

“We have to reach out to the entire value chain including importers, exporters and intermediaries, among others, who process 700-800 tonnes of gold annually. We are trying our level best to bring in institutional participation in commodity space for which we have taken several policy initiatives,” said S K Mahanty, Wholetime Member, the Securities and Exchange Board of India (Sebi).