Gold futures trading is making a re-entry into the Indian
market after a gap of 41 years. This time, however, the
trading will be through the online system.
Multi-Commodity Exchange of India Ltd (NMCEIL) will begin
the online gold futures trading through the terminal of
Geojit Securities at Vigyan Bhavan in New Delhi on 3 October.
All the members of NMCEIL will be able to trade in gold
futures after it goes on-stream.
managing director C J George says the gold futures trading
will allow the players to hedge their risk. The size of
the gold jewellery market in the country is reckoned to
be over Rs 40,000 crore.
any given day, the Indian bullion traders and speculators
are understood to hedge and speculate in gold futures
to the extent of around Rs 1,000 crore through exchanges
in other countries.
is the largest consumer of gold though the per capita
consumption is low. In the current year the estimated
demand of gold in the country is 880 tonnes. Most of the
2,700 jewellers in India are expected to participate in
the trading, George says.
the large contract sizes of many international exchanges,
NMCEIL's unit of trade and delivery is 100gm bar of .999
fineness. The derivative transactions are cleared and
settled through NMCEIL's in-house clearing and settlement
house. Delivery is backed by a Central Warehousing Corporation
(CWC) receipt, which meets the current international standards.
trading is only in gold bars with the hallmark of eight
foreign companies approved by NMCEIL. The trading will
be of three-month contracts starting from December, January
and February. Geojit will be collecting a 10-per cent
margin for 100 gms.
says the gold futures trading has immense scope for individual
investors, non-banking finance companies, financiers and
industrial consumers. While the individuals can cover
the risk of keeping the ornaments, the others can play
safe against a future dip in prices.
online trading will be inaugurated by Union Minister of
Consumer Affairs, Food and Public Distribution Sharad
Yadav. Geojit has at present a 60-per cent share of about
2,000-tonne daily turnover of rubber futures trading and
85 per cent of pepper futures trading in the country.
George says NMCEIL is planning to start futures trading
in wheat and rice soon.