nmce & the evolution of commodity trade in india

8/14/2019 NMCE & the Evolution of Commodity Trade in India

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Evolution

The Indian experience in commodity futures market dates back to thousands of

years. References to such markets in India appear in Kautialya’s ‘Arthasastra’.The words, “Teji”, “Mandi”, “Gali”, and “Phatak” have been commonly heard inIndian markets for centuries.

The first organized futures market was however established in 1875 under theaegis of the Bombay Cotton Trade Association to trade in cotton contracts.Derivatives trading were then spread to oilseeds, jute and food grains. Thederivatives trading in India however did not have uninterrupted legal approval. Bythe Second World War, i.e., between the 1920’s &1940’s, futures trading inorganized form had commenced in a number of commodities such as – cotton,groundnut, groundnut oil, raw jute, jute goods, castor seed, wheat, rice, sugar,

precious metals like gold and silver. During the Second World War futurestrading was prohibited under Defense of India Rules.

After independence, the subject of futures trading was placed in the Union list,and Forward Contracts (Regulation) Act, 1952 was enacted. Futures trading incommodities particularly, cotton, oilseeds and bullion, was at its peak during thisperiod. However following the scarcity in various commodities, futures trading inmost commodities were prohibited in mid-sixties. There was a time when tradingwas permitted only two minor commodities, viz., pepper and turmeric.

Deregulation and liberalization following the forex crisis in early 1990s, also

triggered policy changes leading to re-introduction of futures trading incommodities in India. The growing realization of imminent globalization under theWTO regime and non-sustainability of the Government support to commoditysector led the Government to explore the alternative of market-basedmechanism, viz., futures markets, to protect the commodity sector from price-volatility. In April, 1999 the Government took a landmark decision to remove allthe commodities from the restrictive list. Food-grains, pulses and bullion were notexceptions.

The long spell of prohibition had stunted growth and modernization of thesurviving traditional commodity exchanges. Therefore, along with liberalization of

commodity futures, the Government initiated steps to cajole and incentives theexisting Exchanges to modernize their systems and structures. Faced with thegrudging reluctance to modernize and slow pace of introduction of fair andtransparent structures by the existing Exchanges, Government allowed setting upof new modern, demutualised Nation-wide Multi-commodity Exchanges withinvestment support by public and private institutions. National Multi CommodityExchange of India Ltd. (NMCE) was the first such exchange to be grantedpermanent recognition by the Government



Vision & Mission

Our Vision

National Multi-Commodity Exchange of India Limited is committed to provideworld class services of on-line screen based Futures Trading of permittedcommodities and efficient Clearing and guaranteed settlement, while complyingwith Statutory / Regulatory requirements. We shall strive to ensure continualimprovement of customer services and remain quality leader amongst allcommodity exchanges.

Our Mission

• Improving efficiency of marketing through on-line trading inDematerialization form.

• Minimization of settlement risks.• improving efficiency of operations by providing best infrastructure and

latest technology.• Rationalizing the transaction fees to optimum level.• Implementing best quality standards of warehousing, grading and testing

in tune with trade practices.• Improving facilities for structured finance.• improving quality of services rendered by suppliers.• Promoting awareness about on-line features trading services of NMCE

across the length and breadth of the country.

Leaders

Mr. Kailash R. Gupta - Managing Director

Mr. Kailash Ramkishen Gupta is the founder and Managing Director of NMCE,National Multi Commodity Exchange of India Ltd, the country’s first online multi

commodity trading exchange. Mr. Gupta brings more than 30 years of industryexperience and has the unique distinction of pioneering many revolutionaryconcepts.

Firstly, Mr. Gupta pioneered the concept of online commodities trading in Indiaand founded NMCE in 2002. He was instrumental in not only convincing Govt. ofIndia in bringing reforms and policy changes to allow establishment of nationalcommodity exchanges but also introducing international best practices and



transparent online trading platform. He has been the driving force of NMCE.

Secondly, Mr. Gupta pioneered the concept of finance against warehousereceipts backed by forward sales contracts. Such warehouse receipt financingrequired sound and reliable delivery mechanism and efficient risk management

systems. Such innovations have been the cornerstone of Mr. Gupta’s visionarythought leadership.

Mr. Gupta is actively involved in pushing ahead economic reforms in agriculturalcommodities trading. He is a member of various Trade Associations andChamber of Commerce. He is member of various delegations sent by theGovernment of India for World Bank projects to institute International BestPractices in Commodity Futures Trading.

Previously, Mr. Gupta was engaged in International Trading as the Chairman -MD of Neptune Overseas Ltd., a Government of India-recognized Export House.

Mr. Gupta also served as the President of Ahmedabad Commodity Exchange Ltdin 1997. He holds a Bachelor of Science degree in Biology and Chemistry fromPunjab University, India.

Promoters



Strategic Investors

Reliance Money Limited – RML, an Anil Dhirubhai Ambani group company hasrecently taken an equity stake in the exchange. It is a comprehensive financialservices and solution provider providing customers with access to Equity, Equityand Commodity Derivatives, Portfolio Management Services, Mutual Funds,IPOs, Life and General Insurance and Gold Coins. Customers can also availLoans, Credit Card, Money Transfer and Money Changing services. The largest

broking house in India with over 2.5 million customers and a wide network of over10,000 outlets and 20,000 touch points in 5,000+ locations.

The Board of Directors

Shri B.B. Pattanaik – ChairmanShri B. B. Pattanaik, is Chairman of the Board of Directors of the Company and isthe Managing Director of Central Warehousing Corporation, New Delhi.

Shri Kailash R. Gupta - Managing DirectorMr. Gupta is a Director in Neptune Overseas Limited, a GoI recognized ExportHouse. Mr. Gupta is an eminent figure in Commodity Trading arena in India. Heis a former President of Ahmedabad Commodity Exchange and brought variousDemocratic Reforms and pushed Economic Progress during his tenure as aPresident. Mr. Gupta has participated in various workshops, seminars andtraining programs in the field of Commodity Trading and was also a member ofStudy Tours to various countries sponsored by GoI and World Bank to study BestInternational Practices in Commodity Futures. Mr. Gupta has withdrawn and alsoundertaken to withdraw from trading directly or indirectly in commodities so long

as Neptune Overseas Limited (NOL) is a shareholder of NMCE.

Dr. Sidharth Sinha - DirectorMr.Sinha is Professor of Indian Institute of Management, Vastrapur, Ahmedabad

Shri G.N. Nair - DirectorMr. G.N. Nair, who is a Chartered Accountant & LLB from Kerala University, ishaving around 30 years of Industry experience. He is presently Director



(Finance) of Central Warehousing Corporation (CWC). He was also CEO forsometime of Hindustan Latex Family Planning Promotion Trust (a non-Government Organization) doing social services all over India. He had worked inseveral organizations. Some of the important organizations are Hindustan LatexLtd., Keltron, Trivandrum Rubber Works and Kerala State Detergents &

Chemicals. He has had the experience of managing Public Procurement andHuman Resource Management in Companies. He had training in e-procurementand Procurement Management in Public Sector from International TrainingCentre of International Labour Organisation, Turin, Italy. He is a faculty memberof Institute of Chartered Accountants of India, Institute of Management in Govt. ofKerala and M/s. Suliaman Associates, Kochi. He is past Chairman of TrivendurmChapter of ICAI, past Secretary of Rotary Club of Trivandrum Central, Member ofTrivendurm Management Association, Member of Trivendurm Chapter of NIPMand Member of Central Chinmaya Mission, Trivendurm, Delhi & Noida. He hasvisited France, Bangaladesh and Dubai also.

Shri L P Agarwal - DirectorShri L P Agarwal is Chief General Manager (Treasury) in Punjab National Bank.

Shri D.K. Mukhopadhyay - DirectorMr. D. K. Mukhopadhyay is M.A. (Economics), M.Soc. So. (DevelopmentAdministration from University of Birmingham, UK, LL.B from University ofCalcutta. He has joined Indian Economics Service, Government of India in 1971and worked in different Ministries and Central Government Departments invarious categories till September 2005 (35 years)

Smt. K. S. Uma, IES, Director (Government Nominee)Smt. K.S. Uma was selected in the Indian Economic Services (IES) in the year1980. She is a post graduate in Economics. She is associated with ForwardMarkets Commission. Presently she is Economic Advisor in Forward MarketsCommission. She has attended many training programs which includes"International experience in Regulation of Futures Markets" by Chicago FuturesTrading Commission, Chicago, U.S.A.

Shri Parikshit Kumar Agarwal - DirectorMr. Parikshit Kumar Agarwal is associated with Business since long. He wasassociated with Gunny Trade Association (GTA) as Deputy President and EastIndia Jute & Hessian Exchange Limited (EIJHE) as Director.

Shri Anil Singhania - DirectorShri Anil Singhania is associated with Business since 1979 with an experience of26 years in National & International Trading in Chemicals, Metals, Oils & FerroAlloys. He is Managing Director of M/s. Singhania International Limited.

nmce & the evolution of commodity trade in india

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