Description
history of commodity exchanges in India and gives information about various commodity exchanges in India like NMCE, NCDEX, MCX, ICEX.
INDIAN COMMODITY MARKET
Commodity Eco System
USERS Farmers & Farmer Cooperatives APMC Mandis Traders State Civil Supplies Cooperations
Logistics Companies
Storage & Transportation Requirements Quality Certification Requirements
SUPPORT AGENCIES Central & State Warehousing Corporations
Testing & Certifying Companies SPOT MARKET
Private Sector Warehousing Companies
EXCHANGE
Warehousing Receipt System Lending Agencies Commodity Info
History
1875
• Bombay Cotton Trade Association was established
1900
• Gujarati Vyapari Mandali was established in Bombay • Futures trading in oil seeds started
1918
• Cotton Contracts Committee was established by governemnt • Replaced by cotton contract board in 1919
1919
• Calcutta Hessian exchange was established • Futures trading in raw jute and jute goods began
History (contd.)
1927
• East Indian Jute Association Ltd. was set up for organizing futures trading in raw jute • Merged with Hessian exchange in 1945
1939
• Govt. of Bombay bars options trading in cotton • followed by a ban on forward trading in oilseeds and some other commodities such as food-grains, spices, vegetable oils, sugar and cloth in 1943
1952
• Forward Contracts (Regulation) Act was passed • Act prohibited options trading in goods along with cash settlement of forward trades • Only those associations/exchanges, which were granted reorganization from the Government, were allowed to organize forward trading in regulated commodities
History(contd.)
• These measures weakened the agricultural commodity markets in India • Consequently, the commodities derivative markets were dismantled and remained dormant for about four decades till the 1990s • Post liberalization change of policy • 1993 – Kabra committee was set up • 1994 - Committee recommended the removal of the ban on futures trading of most of the commodities and the ban was lifted by the government on 17 commodity groups • 1999 – Government removed all the commodities from the restricted list including food grains, pulses etc.
Nationwide Commodity Exchanges
• Need for nationwide commodity exchanges
?To replace physical settlement by warehouse receipt method ?Electronic trading system ?Counter party risk ?Wider participation ?Increase liquidity
Nationwide Commodity Exchanges
4 National Multi-Commodity Exchanges
?NMCE – National Multi-Commodity Exchange of India Ltd. ?NCDEX – National Commodity & Derivates Exchange Ltd. ?MCX - Multi Commodity Exchange of India Ltd. ?ICEX - Indian Commodity Exchange Ltd.
NMCE- National Multi-Commodity Exchange
• Started operation in NOV 2002 • First demutualised electronic commodity exchange of India • Head office located in Ahmadabad • Order driven
NMCE- National Multi-Commodity Exchange
Holding structure in NMCE by promoters
5%
7%
26% 10% CWC OTHERS NOL 10% RELIANCE PNB 17% 25% GAICL
NAEFD
NMCE- National Multi-Commodity Exchange
Trading hierarchy
Trading cum clearing member
• Can clear or execute transactions either on one’s own behalf or on other trading member’s behalf • Must have a net worth of Rs 5 million
Trading member
• Can execute transactions either on one’s own behalf or on behalf of its clients • Must have a net worth of Rs0.5 million
Institutional clearing members
• Do not have the right to trade on their own account • Clear transactions on behalf of their clients • Must have a net worth of Rs 250 million
NMCE- National Multi-Commodity Exchange
Margin Systems
Initial margin Special margin Delivery margin
• Levied on all open positions of the members and their clients • Varies from commodity to commodity
• Acts as a speed breaker for sharply rising/falling prices • Applied when prices reaches a level above/below previous day’s closing price
• applicable to the contracting parties (both, buyer and seller) from the 12th day of the contract maturity month
NMCE- National Multi-Commodity Exchange
Acceptance level of NMCE in the market
Value of commodities traded
INR Billion 3918
2212
745 426 342 488 243 2005 2006 2007 2008 2009
2003
2004
NCDEX
• Commenced operations in Dec 2003 • Located in Mumbai • Facilitates trading in 57 commodities mainly agricultural products • Trading system:
• Same as NMCE
• Margin systems
• Same as NMCE, only the way of calculating IM differs
NCDEX
Acceptance of NCDEX in the market
Value of commodities traded
INR Trillion
13.3
9.4 8.3 6.4 8.3
1.6
2004
2005
2006
2007
2008
2009
MCX
• Commenced operations in Dec 2003 • Located in Mumbai • Facilitates trading in 40 commodities mainly agricultural products • Promotors: FT, SBI, BoI, BoB, Corporation Bank • Partnership with TOCOM
REGULATOR
• Forward Markets Commission (FMC) headquartered at Mumbai, is overseen by the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India. • It is a statutory body set up in 1953 • Fortnightly dissemination of Data • Issues
– – – – – financial and operational autonomy adequate powers required for effective regulation penal provisions Appellate Authority options in goods
doc_232853920.pptx
history of commodity exchanges in India and gives information about various commodity exchanges in India like NMCE, NCDEX, MCX, ICEX.
INDIAN COMMODITY MARKET
Commodity Eco System
USERS Farmers & Farmer Cooperatives APMC Mandis Traders State Civil Supplies Cooperations
Logistics Companies
Storage & Transportation Requirements Quality Certification Requirements
SUPPORT AGENCIES Central & State Warehousing Corporations
Testing & Certifying Companies SPOT MARKET
Private Sector Warehousing Companies
EXCHANGE
Warehousing Receipt System Lending Agencies Commodity Info
History
1875
• Bombay Cotton Trade Association was established
1900
• Gujarati Vyapari Mandali was established in Bombay • Futures trading in oil seeds started
1918
• Cotton Contracts Committee was established by governemnt • Replaced by cotton contract board in 1919
1919
• Calcutta Hessian exchange was established • Futures trading in raw jute and jute goods began
History (contd.)
1927
• East Indian Jute Association Ltd. was set up for organizing futures trading in raw jute • Merged with Hessian exchange in 1945
1939
• Govt. of Bombay bars options trading in cotton • followed by a ban on forward trading in oilseeds and some other commodities such as food-grains, spices, vegetable oils, sugar and cloth in 1943
1952
• Forward Contracts (Regulation) Act was passed • Act prohibited options trading in goods along with cash settlement of forward trades • Only those associations/exchanges, which were granted reorganization from the Government, were allowed to organize forward trading in regulated commodities
History(contd.)
• These measures weakened the agricultural commodity markets in India • Consequently, the commodities derivative markets were dismantled and remained dormant for about four decades till the 1990s • Post liberalization change of policy • 1993 – Kabra committee was set up • 1994 - Committee recommended the removal of the ban on futures trading of most of the commodities and the ban was lifted by the government on 17 commodity groups • 1999 – Government removed all the commodities from the restricted list including food grains, pulses etc.
Nationwide Commodity Exchanges
• Need for nationwide commodity exchanges
?To replace physical settlement by warehouse receipt method ?Electronic trading system ?Counter party risk ?Wider participation ?Increase liquidity
Nationwide Commodity Exchanges
4 National Multi-Commodity Exchanges
?NMCE – National Multi-Commodity Exchange of India Ltd. ?NCDEX – National Commodity & Derivates Exchange Ltd. ?MCX - Multi Commodity Exchange of India Ltd. ?ICEX - Indian Commodity Exchange Ltd.
NMCE- National Multi-Commodity Exchange
• Started operation in NOV 2002 • First demutualised electronic commodity exchange of India • Head office located in Ahmadabad • Order driven
NMCE- National Multi-Commodity Exchange
Holding structure in NMCE by promoters
5%
7%
26% 10% CWC OTHERS NOL 10% RELIANCE PNB 17% 25% GAICL
NAEFD
NMCE- National Multi-Commodity Exchange
Trading hierarchy
Trading cum clearing member
• Can clear or execute transactions either on one’s own behalf or on other trading member’s behalf • Must have a net worth of Rs 5 million
Trading member
• Can execute transactions either on one’s own behalf or on behalf of its clients • Must have a net worth of Rs0.5 million
Institutional clearing members
• Do not have the right to trade on their own account • Clear transactions on behalf of their clients • Must have a net worth of Rs 250 million
NMCE- National Multi-Commodity Exchange
Margin Systems
Initial margin Special margin Delivery margin
• Levied on all open positions of the members and their clients • Varies from commodity to commodity
• Acts as a speed breaker for sharply rising/falling prices • Applied when prices reaches a level above/below previous day’s closing price
• applicable to the contracting parties (both, buyer and seller) from the 12th day of the contract maturity month
NMCE- National Multi-Commodity Exchange
Acceptance level of NMCE in the market
Value of commodities traded
INR Billion 3918
2212
745 426 342 488 243 2005 2006 2007 2008 2009
2003
2004
NCDEX
• Commenced operations in Dec 2003 • Located in Mumbai • Facilitates trading in 57 commodities mainly agricultural products • Trading system:
• Same as NMCE
• Margin systems
• Same as NMCE, only the way of calculating IM differs
NCDEX
Acceptance of NCDEX in the market
Value of commodities traded
INR Trillion
13.3
9.4 8.3 6.4 8.3
1.6
2004
2005
2006
2007
2008
2009
MCX
• Commenced operations in Dec 2003 • Located in Mumbai • Facilitates trading in 40 commodities mainly agricultural products • Promotors: FT, SBI, BoI, BoB, Corporation Bank • Partnership with TOCOM
REGULATOR
• Forward Markets Commission (FMC) headquartered at Mumbai, is overseen by the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India. • It is a statutory body set up in 1953 • Fortnightly dissemination of Data • Issues
– – – – – financial and operational autonomy adequate powers required for effective regulation penal provisions Appellate Authority options in goods
doc_232853920.pptx