Well! In commodity markets, the margins are very low and range between 5-8%. This means that by putting upfront an amount of Rs 5, you can trade up to Rs 100 on the exchange.
On NCDEX
National Commodity & Derivatives Exchange Limited (NCDEX) is a national level on-line multi commodity exchange which commenced operations on December 15, 2003. It offers futures trading in both agriculture and non-agriculture commodities. The Exchange has eight shareholders: Canara Bank, CRISIL Limited, ICICI Bank Limited, IFFCO, LIC, NABARD, NSE and PNB. All the shareholders bring along with them expertise in closely related fields such as risk management (CRISIL), rural bank network (Canara Bank in the south and PNB in the north), technology (ICICI Bank), agriculture (NABARD), on-line trading technology and derivative trading (NSE), market reach (IFFCO which has the largest number of farm cooperatives) and expertise in institution building (LIC).
NCDEX offers trading facilities through its trading and clearing members located across over 460 centres in the country. Presently there are over 500 members spread across the country with trading taking place on over 6000 terminals.
Currently NCDEX offers contracts in 27 commodities. The contracts being traded are in gold, silver, soybean, refined soybean oil, soybean meal, rapeseed-mustard seed, expeller rapeseed-mustard seed oil, RBD palmolein, crude palm oil, medium (J-34) and long (S-6) staple cotton, rubber, jute, pepper, guar seed, wheat, chana, castor seed, sugar, turmeric, guar gum, raw jute, rice, maize, gur, urad, silk and yellow peas. Around 85% of the Exchange volumes come from agricultural commodities. Efforts are underway to add another 20 to 25 commodities including base metals like steel, aluminium, copper, zinc, nickel; energy products like natural gas, coal and electricity.
Innovations at NCDEX
NCDEX is the only organization in India which provides near real time spot prices of commodities traded on the Exchange which are polled in various principal market places two to three times a day and then statistically cleansed before being disseminated.
The spot prices that are collected and futures prices traded on the Exchange are disseminated through its website, trader work station, news agencies such as Reuters, Telerate, Telequotes, Bloomberg, newspapers and journals, rural kiosks (e-chaupals and n-Logue), TV channels such as Doordarshan News, CNBC, etc.
NCDEX has also tied up with the Government of India's national level call centre initiative titled 'Kisan Call Centres' that provides on-line guidance and handholding to farmers in the country.
NCDEX has also spearheaded pilot projects in the states of Gujarat and Andhra Pradesh for cotton, Madhya Pradesh for soya and Rajasthan for price dissemination through PCOs.
NCDEX has taken an initiative in setting up a new company called National Collateral Management Services Limited to take care of the issues of warehousing, collateral management as well as facilitate commodity finance by banks.
NCDEX has worked successfully to network and accredit around 50 warehouses along with reliable assaying facilities through reputed agencies. The Exchange was the first to facilitate holding of commodity balances in an electronic form very much like cash in a savings bank account and securities in an electronic custodial account. Physical delivery in an electronic form (demat mode) has already taken place in gold, silver, castor seed, raw jute, pepper, chana, soymeal, sugar, wheat, urad, guar seed and guar gum and yellow peas.
NCDEX has developed comprehensive training modules on commodities and their derivatives processes in online trading, risk management processes, etc. NCDEX has been conducting awareness programmes across the country to highlight the opportunities in the commodity space, which have been very well received. In the first three quarters of the finan
Answered by
Hemant Kumar
at
10:36 AM on November 21, 2008
