The promoters of the two Mumbai-based new nationwide multi-commodity exchanges (NMCEs) would soon approach stockbrokers of both The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) as also institutional stock brokerages, among others, for membership.
The Securities and Exchange Board of India (Sebi) has, in principle, agreed to permit stockbrokers to trade in commodity futures.
Aiming to start trading in commodity futures by the last quarter of 2003, the new commodity exchanges have kicked off their membership drive.
ICICI Bank-led combine’s National Commodity and Derivatives Exchange (NCDEX) has offered membership at Rs 30 lakh (for TCM or trading-cum-clearing members) and Rs 50 lakh (for PCM or professional clearing member).
The Multi Commodity Exchange (MCX) of India, promoted by Financial Technologies, is offering TCM membership at Rs 7.5 lakh.
The networth requirement for NCDEX’s TCM is Rs 50 lakh and Rs 10 crore for PCM (banks, institutional brokerages, clearing houses and custodians like the Stock Holding Corporation). For MCX, the networth requirement is Rs 10 lakh for individuals, registered firms and associations, and Rs 25 lakh for corporate bodies, banks and financial institutions.
Interestingly, while both these new commodity exchanges say professionals like chartered accountants and chartered financial analysts and MBAs would be preferred over others, NCDEX has made it clear that applicants who are defaulters or who have been convicted of fraud/dishonesty, or have been expelled from other stock/commodity exchanges will not be admitted into the NCDEX.
What is more, while inviting memberships, the stress would be on professionalisation in the commodity futures market, where only speculators and traditional traders are said to be ruling, mainly because of the four-decade ban on formal trading in commodity futures. During this period, almost two generations of commodity futures players have been lost, resulting in a thriving illegal commodity futures market.
It may be recalled that NCDEX plans to offers trading in futures of seven to nine commodities, including bullion (gold and silver), cotton, soyabean (and its oil), mustardseed (and its oil), RBD palmolein and crude palmolein. From the first day of operations, it intends to offer trading facilities from 40 centres.
On the other hand, MCX plans to offer trading in futures of bullion, castorseed, cotton, rubber and pepper.