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Online trading in 11 more commodities

Sunanda Sanganeria

The Bombay Commodities Exchange on Tuesday begun online trading in 11 more commodities, including rice bran, sesamum, safflower and cotton seed, on its website www.bceindia.com.

Anjani Sinha, chief executive officer of the exchange said, "The BCE received clearance for forward trading in 11 commodities from the Forwards Markets Commission on April 1, 2002, and we have commenced trade from today, thus taking our list to 20 commodities."

The exchange would start trade in rice bran, sesamum seeds, safflower seed and cotton seed along with their oil and cake, Sinha said, adding that inclusion of the new commodities would ensure higher volumes because the BCE was the only exchange to have these commodities under its umbrella.

"Currently, the volume traded is around Rs 10-15 million per day, and we hope this will go up as our portfolio increases," the chief executive stated.

BCE started web-enabled trading from November 25, 2001. "In order to increase the trading volume, BCE has also tied up with the Kanpur Commodities Exchange," Sinha said. Since this was not legally permitted, the BCE and the Kanpur exchange would form subsidiaries wherein members of the exchanges would take membership, become sub-brokers and then traders, he added.

Kanpur Commodities Exchange has approval from the Forwards Markets Commission to trade in rapeseed, rapeseed oil and cake.

Sinha said other exchanges like the COFEI, IPSTA and the Ahmedabad Commodities Exchange had also shown interest in the BCE.

On the necessity of an institutional clearing mechanism for the futures trade, Sinha said, "The Bank of Baroda and the Union Bank of India are involved with the BCE's futures trade and will invest Rs 10 million each. The two banks have already ploughed in Rs 4.5 million each."

As per the regulations, a bank's share in the total paid-up equity of an exchange cannot cross 30 per cent. "Once more investments start coming in, the BCE's paid-up equity will increase and the two banks will invest the remaining Rs 5.5 million," Sinha said.

The exchange has also set up a clearing and settlement agency, Prime Commodities Clearing Corporation of India, to undertake functions like processing of traded transactions, receiving and maintaining payments and settlement of contracts.

"The corporation has a settlement guarantee fund to provide counter-guarantees against financial defaults," Sinha said.

The BCE, formerly known as the Bombay Oilseeds and Oils Exchange, will gradually phase out the existing open outcry trading system.

The exchange, which offers domestic futures trading in commodities -- mainly castor seed and RBD palmolein -- has brought in computer software and training firm SSI Industries to develop an Internet-based trading system.

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