BSE kicks off trading in commodity derivatives
NEW DELHI: BSE on Monday kicked off its commodity derivatives segment, with 142 members on board. This is the first time a stock exchange is offering contracts in commodity derivatives in the country.
The move is expected to help establish better linkages between the commodity derivatives market and underlying spot markets. NSE will kick off commodity contracts from October 12, 2018.
BSE, which will not charge commodity brokers for first 12 months, said it aims to be price setter for 10 commodity products in India.
According to the exchange, its commodity derivatives platform will help efficient price discovery, reduce timelines and make it cost effective. The bourse also promised a user-friendly platform with robust risk management system and wider market penetration.
In an interview with ETNow, a BSE spokesperson said pan-India physical delivery of commodities is the need of the hour. He said physical delivery of equity derivatives, too, should be encouraged.
BSE is focused on creating an orderly commodities market, he said. BSE will conduct commodity trading from 10 am to 11.30 pm from Monday to Friday.
On Monday, the exchange launched delivery-based futures contract in gold (1 kg) and silver (30 kg). Initially, it will offer derivative contracts only in non-agriculture commodities.
NSE has also received Sebi approval for introducing derivative contracts on Gold 1 Kg, Gold Mini 100 gm and Silver 30 kg on its commodity derivatives platform.
“On the face of it, commodity trading on equity exchanges is a welcome step, as all assets can be offered to clients under one roof. However, replicating or trying to create liquidity for the same contracts which has huge liquidity elsewhere can be a huge challenge. Unless there is a clear benefit or advantage to clients to shift to these exchanges, it looks unlikely that there might be migration or new liquidity,” Gnanasekar Thiagarajan of Commtrendz Research told ETMarkets.com.
BSE also said talks were on with brokers for extending trading hours in equities. Failing to extend equity trading hours will be unjust to investors, the BSE spokesperson said.
The move is expected to help establish better linkages between the commodity derivatives market and underlying spot markets. NSE will kick off commodity contracts from October 12, 2018.
BSE, which will not charge commodity brokers for first 12 months, said it aims to be price setter for 10 commodity products in India.
According to the exchange, its commodity derivatives platform will help efficient price discovery, reduce timelines and make it cost effective. The bourse also promised a user-friendly platform with robust risk management system and wider market penetration.
In an interview with ETNow, a BSE spokesperson said pan-India physical delivery of commodities is the need of the hour. He said physical delivery of equity derivatives, too, should be encouraged.
BSE is focused on creating an orderly commodities market, he said. BSE will conduct commodity trading from 10 am to 11.30 pm from Monday to Friday.
On Monday, the exchange launched delivery-based futures contract in gold (1 kg) and silver (30 kg). Initially, it will offer derivative contracts only in non-agriculture commodities.
NSE has also received Sebi approval for introducing derivative contracts on Gold 1 Kg, Gold Mini 100 gm and Silver 30 kg on its commodity derivatives platform.
“On the face of it, commodity trading on equity exchanges is a welcome step, as all assets can be offered to clients under one roof. However, replicating or trying to create liquidity for the same contracts which has huge liquidity elsewhere can be a huge challenge. Unless there is a clear benefit or advantage to clients to shift to these exchanges, it looks unlikely that there might be migration or new liquidity,” Gnanasekar Thiagarajan of Commtrendz Research told ETMarkets.com.
BSE also said talks were on with brokers for extending trading hours in equities. Failing to extend equity trading hours will be unjust to investors, the BSE spokesperson said.