Business

Multi-Commodity Exchange starts operations

By Our Special Correspondent

AHMEDABAD JAN. 31. The country's first stock exchange in agricultural commodities, the National Multi-Commodity Exchange of India Limited, set up on the lines of the National Stock Exchange, has launched its operations.

Headquartered in Ahmedabad, the multi-commodity stock exchange is the upgraded version of the Online Commodity Exchange of India Limited, recognised by the Union Ministry of Consumer Affairs, Food and Public Distribution, for forward trading in agricultural commodities.

Beginning with oils, oilseeds and oilcakes, the exchange has planned to deal with 24 agricultural commodities. Promoted by the Central Warehousing Corporation, the National Agricultural Co-operative Marketing Federation of India (NAFED), the Gujarat Agro-Industries Corporwation, the National Institute of Agricultural Marketing, and the Gujarat State Agricultural Marketing Board, the multi-commodity exchange will play an important role in price discovery, managing price risks, financial stability for market operators, standardise quality for deliverable commodities.

According to its managing director, Kailash Gupta, the stock exchange will not only do away with the need for huge storage facilities but also guarantee remunerative prices to the farmers for their produces well in advance.

The exchange, which already has 115 participating members, intends to limit the membership to 1,500 with strict regulations for membership entry for proper performance.

The exchange would act as counter-party for each leg of trade and guarantee financial performance of the contract.

It already has an adequate Trade Guarantee Fund commensurate with the volume of trading and proposed to set up a Customer Protection Fund to extend high level of protection to all users of the market, which Mr. Gupta claimed, was "totally unprecedented" in the commodity derivatives market.

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