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India’s first futures trading in natural rubber starts in Kochi news
Jays Jacob
17 March 2003

Kochi: Futures trading in natural rubber began on 15 March 2003 for the first time in India, when the first transaction was entered into on the National Multi-Commodity Exchange of India Ltd (NMCEIL) through Geojit Securities, the only member of the exchange from Kerala.

Rubber Board chairman S Maria Desalphine inaugurated the futures trading in natural rubber by clicking the transaction at Geojit Securities’ trading terminal here. The Ahmedabad-based NMCEIL, which is the only bourse that offers futures trading in rubber in the country, will trade in RSS-4 grade in the commodity and for April and May contracts.

The minimum contract size is 1 tonne. Instead of the conventional outcry system, the futures trading in NMCEIL will take place through the transparent screen-based online trading system via V-Sat network.

Speaking after the inauguration, Desalphine said except in Malaysia, the other countries, especially Singapore and Japan, have an active futures market in rubber. “Futures trading will benefit the farmers as well as the traders in getting an indication of the prices movements of the commodity in the coming months.”

The first two contracts done showed the RSS-4 grade fetching a price of Rs 4,650 per quintal for April and Rs 4,675 for May delivery. With the current prices ruling at Rs 4,450 per quintal, this two trades indicate that the rubber prices will firm up in the coming months.

“Futures in rubber will bring in a better price-discovery mechanism. Anonymity of trading participants and effective risk management system ensure free and fair trading,” says NMCEIL managing director Kailesh Gupta.

The commodity bourse, which has a total of 115 members across the country, has an in-house clearing house in Ahmedabad and has connectivity with all the members and clearing banks, says Gupta. Delivery in the underlying commodities will be backed by a warehouse receipt, which meets current international standards.

V Kannan, regional manager, Central Warehousing Corporation, which holds 26 per cent in NMCEIL, said the rubber stored at CWC will be maintained in the highest quality. “The warehouse receipt-based trading system will expand and deepen the commodities market in the country.”

The rubber farmers, a large percentage of whom are having small holdings, will benefit immensely through the futures trading. About 88 per cent of rubber production in India, which is the third-largest producer of natural rubber and the fourth-largest consumer of the commodity, is from 1 million small holdings with an average of 0.5 hectare.

K R Jyothi Lal, agriculture director, Kerala, made the presidential address. Apollo Tyres senior vice-president N Sreekumar, Cochin Rubber Dealers Association president N Radhakrishnan and Association of Planters in Kerala vice-president V P Nampi also spoke on the occasion. C J George, managing director, Geojit Securities, welcomed the gathering while George Jacob, its advisor, proposed the vote of thanks.


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India’s first futures trading in natural rubber starts in Kochi