Date:22/06/2006 URL: http://www.thehindubusinessline.com/2006/06/22/stories/2006062200161200.htm

Back MCX gets FMC approval for natural gas futures

Pratim Ranjan Bose

Contracts to be linked to Nymex; launch likely in early July

Trade issues
Bid to rope Gujarat State Petronet as a service provider fails.
Potato contracts to be linked to the Tarakeswar Mandi in Bengal.

Kolkata , June 21

The Multi Commodity Exchange (MCX) has received approval from the Forward Markets Commission for launching forward contracts in natural gas. The contracts will be linked to Nymex and will be launched in early July.

Commenting on the delay in launching natural gas futures trading, sources told Business Line that while the FMC was insisting on the launch of a delivery-backed contract for better price relevance in the Indian markets, absence of a local spot market and lack of interest from service providers have been the bugbear for the exchange.

Unsuccessful attempt

The exchange had unsuccessfully tried to rope in Gujarat State Petronet as a service provider, sources point out. A similar attempt by the National Commodity and Derivatives Exchange Ltd too proved futile.

It may be mentioned that unlike crude oil, natural gas has no global price benchmarks. Accordingly, contracts linked to Nymex may not help any price discovery for natural gas in the Indian context.

`Kufri Jyoti'

MCX has also finalised launching futures trading in `Kufri Jyoti' variety of potato (popularly known as Bengal potato) in July. The exchange has already received the requisite permission from FMC. The potato contracts will be linked to the Tarakeswar Mandi in West Bengal.

Bengal is the second largest potato producer in the country after Uttar Pradesh. Accordingly, the forward contracts in Kufri Jyoti are expected to help price discovery in the local spot market.

MCX has already launched forward contracts on 3797 potato varieties available in Uttar Pradesh and is currently recording a daily turnover of Rs 40-50 crore.