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Indian Spices Market: MCX Initiatives
Mr. Anjani SinhaDirector, MCX
MD & CEO, National Spot Exchange
The beginnings …
10th Nov, 2003Govt.’s permanent recognition
23rd Sept 2003
7th Largest IT Company in INDIA
National Stock Exchange
Largest Stock Exchange of India
Empowering rural India
100 years of successful Banking
Worlds largest Fund house
Largest Bank in IndiaProminent PSU Bank Leading Commercial Bank
Prominent PSU Bank Leading Pvt. Sector BankProminent PSU Bank JV between SBI & Cardiff SA
SPICES: Black Pepper,Jeera, Red Chilli,Turmeric,Cardamom
FIBRE : Kapas,Cotton Long Staple,Cotton Medium Staple,Cotton Short Staple
OTHERS: Mentha Oil, Cashew Kernel, Guar Seed, Guar Gum
PLANTATION : Rubber
PULSES : Chana,Tur,Urad,Yellow Peas, Masur
BULLION : Gold, Silver
OIL &OIL SEEDS : Mustard Seed/Refined Soy oil, Mustard Oil/Rapeseed Oil Expeller, Castor Seed,Castor Seed: Disa, Castor Oil ,Crude Palm Oil ,Groundnut Oil Expeller,RBD Palmolein,Soy Seed , Rape seed,Kapasia Khalli, Sesame Seed,Cotton Seed
Light Sweet Crude Oil, Natural Gas
Brent Crude Oil, Furnace Oil Middle East crude oil
Non-Ferrous Copper , Zinc, Aluminum, Tin, Nickel
Ferrous Steel Long, Steel Flat, Sponge Iron
FOODGRAINS : Wheat , Maize ,Rice, Basmati Rice,Sarbati Rice
PLASTIC: Polypropylene, High Density Polyethylene
JAGGERY: Gur,Sugar Medium Grain, Sugar Small Grain
Second largest Silver Exchange & Third largest bullion
Exchange in the world and fourth largest Crude Oil
Exchange in the world.
Indian Futures Market Share: 55%
Average & Highest Daily Turnover Rs.8000 cr & 17594 Cr.
Record of launching innovative products i.e. Mentha Oil ,
Global Strategic tie up
Delivering Business Value
Service provider - FTIL
Electronic trading platform ( No-open Outcry )
Well established disaster management system
Exceptional Service Standards
Risk Management as per International Standards
Resource talent pool
Seamless & continuous training
Advisory Boards for all important commodities
In addition ….
Proper checks – Price polling, Quality certification
Efficient Hedging platform
All this has resulted in customers “Trade with trust”
Cardamom Futures contract
Spices Futures Contracts :Black Pepper, Cardamom, Red Chilly,Jeera & Turmeric
No. of Contracts 12
Time Horizon Commences 4 months ahead
Contract Expiry 15th of every month
Trading Unit 5 Quintals
Price Quotation Rs. per kg. Ex-Vandenmedu (excluding all taxes & levies)
Max. Order Size 50 Quintals
Tick Size 50 Ps / Kg
Daily Price Limit 6 %
Initial Margin 7 %
Special Margin As deemed suitable
Max Open Position
Individual clients: 50 TonsMember: 25% of the open market position
Due Date Rate On 15th. Avg of 3 days spot price
( For Oct contract , trading unit is 1 quintal and tick size is 10 paise. From November onwards the trading unit is 5 quintals & tick size 50 paise)
Cardamom: Contract Specifications
Defaulting Sellers: 7%Defaulting Buyers: 7%
Delivery Unit 5 Quintals
Tender Date 12th to 15th of the contract month. Delivery Order, Warehouse receipt and Quality Certificate have to be tendered by seller on this date
Delivery Period 12th-15th of the Delivery Month
Delivery Center Vandenmedu
Warehouse KSWC , Vandenmedu
Delivery Period Margin
Cardamom: Delivery details
Futures contract as a hedging tool ..
Exporters can buy cardamom in the exchange and lock
in prices. Ex: 10 tons export order in Jan , can buy Jan
contracts now, and at the same time sell in the
international markets . Thus exporters can lock in prices
with initial margin and later square off or take delivery
Exporter holding physical stock can sell futures to lock
the prices by paying an initial margin. (Price risk
Spices : Physical Market in India
Major Producing states of Spices are located in:
Kerala, Tamilnadu, Gujarat, Rajasthan, Andhra Pradesh etc
Spices Major Trading Center
Kalpetta, Sultanbathery, Kozhikode, Manjeri, Cochin
Jeera Unjha, Mumbai, Nagaur
Turmeric Salem, Erode, Coimbatore, Nizamabad, Sangli
Cardamom Vandanmedu , Cochin, Kumily
Red Chilly Guntur, Warngal, Khmmam
Present Status of Spices Markets
Futures Market• Compulsory Delivery Futures Contracts• Quality Heterogeneity at Regional Levels• Heterogeneity in Warehouse receipt validation• Less availability of Additional Delivery centers• Disparity in DDR calculation
Physical Market• Fragmented Markets• Less transparency in Pricing• Government Control / Legal hurdles in Commodity
• National Spot Exchange is poised to set up a national level electronic transparent institutionalized spot market.
• It provides a place, where farmers can sell at the best possible rate, end users can buy at the most competitive rate and National Spot Exchange would provide counter party guarantee in respect of all trades.
• National Spot Exchange would also provide services like quality certification, storage of goods and other customized value added services.
• National Spot Exchange would strengthen the future market by creating a delivery platform, which can be used by the buyers and sellers to procure / dispose off deliveries.
• After launching of National Spot Exchange, the canvass of commodity trading would be complete– India will have both spot and future market available on electronic platform with national reach.
National Spot Exchange: The concept
National Spot Exchange: The concept
National Spot Exchange Platform
Trading related information
• Opening of contracts
• Trading unit
• Tick size
• Quotation / Base value
• Price quote
• Daily price limits
• Initial margin
• Maximum order size
Delivery related information
• Delivery unit
• Delivery center(s)
• Standards etc.
• Tolerance limit for quality /
quantity - discount /
• Black Pepper (MG 1) Kochi & Wyanadu delivery contract
• Black Pepper Ungarbled Wyanadu, Idukki & Cochin delivery
• Cardamom Idukki & Cochin delivery contract
• Also Multiple Delivery contracts in Turmeric, Red Chilly &
• Multiple contracts to suit the requirement of buyers and
Contracts with Specific Quality & Delivery centers
Delivery in National Spot Exchange
• Lesser Dependency on Commission Agents.• Negligible Brokerage/commission• Desktop Monitoring • Efficient Warehousing and logistics support• Time Saving• Complete end to end solution• Guaranteed Trade with Weighment and Quality
assurance• A New distribution channel with trade guarantee.• A complementary market to derivative traders.• Timely disbursement of commodities and funds.• Transparency in transaction and settlement.
Advantage of National Spot Exchange Platform
National Spot Exchange Participants
National Spot Exchange: Advantages
Advantages to the Traders
• Traders would get a bigger market, where they can sell huge quantity.
• In physical market, they always face the risk of counter party defaults, which will be totally guaranteed on National Spot Exchange platform. A settlement guarantee fund would be maintained for this purpose.
• Since large number of investors from all across the country would be available at National Spot Exchange platform, they can realize better price for their product.
• They can expand their activities to multiple commodities, because of operational ease, availability of finance and absence of counter party risk under National Spot Exchange system.
Advantages to the Exporters
• They can buy certified quality material through a secured platform.
• Hassles relating to procurement of material in physical market is totally avoided.
• They can save brokerage or commission payable to procurement agents
• Looking at the price available at National Spot Exchange, they can make export commitment and cover themselves immediately by buying at National Spot Exchange
• Customized services regarding logistics can be provided by National Spot Exchange.
• Commodity exchanges would get a fair transparent spot price for settlement of their contracts.
• Regulator wants to move towards compulsory delivery in various commodities. National Spot Exchange would provide the stepping stone for this purpose.
• Investors can buy physical material on National Spot Exchange and do arbitrage with future contracts traded on MCX.
• Long term investors can buy physical commodities stored at National Spot Exchange warehouses and take advantages of off season price rise. It can create an alternative investment instrument, just like investing in stock market.
Advantages to the Futures Market
102 A , Landmark Suren Road, ChakalaAndheri (East) Mumbai 400 093.Tel: +91-22 - 6709 9300 Fax :+91-22 - 6709 9044 Web : www.mcxindia.com
DISCLAIMER:The Information in the presentation is solely for informational purpose and should not be regarded as a recommendation by MCX. All information in the presentation is obtained from the sources believed to be reliable and MCX or any of the associate entities make no representation as to its completeness or accuracy.MCX accepts no obligation to correct or update the information or opinion.No member of MCX or its associate entities accept any liability whatsoever consequent ional or other loses arising from the use of the presentation and or further communication in relation to this presentation.
MCX hits record turnover of
MCX hits record turnover of