BSE to expand commodity derivatives with slew of new contracts next quarter

Topics BSE | Brent oil | Brent crude oil

According to the BSE data, it has facilitated delivery amounting to over 6.6 tonnes in precious metals and over 5,000 tonnes in agri commodities
The Bombay Stock Exchange is planning several new contracts whose launch is scheduled for the December quarter, after consolidating its position in the commodity derivatives segment. The new contracts it plans to introduce in October-December quarter include Brent crude oil, soya bean, kapas and a first-of-its-kind almond contract in India, all subject to regulatory approval.

India’s crude price is benchmarked to Brent Oil while the most successful crude oil contract on MCX is based on the light sweet variety from US, known as West Texas Intermediates (WTI). BSE plans to launch Brent to provide a better hedging alternative.

Sameer Patil, Head Business development, BSE, said, “We can confirm that this is just the start of the long list of innovative products we plan to introduce on our commodity trading platform, thus deepening and adding more value to the existing commodities ecosystem.” BSE’s cotton and guar seed contracts have made a good beginning and the exhange recently launched turmeric futures.

BSE’s average daily volumes in August in cotton and guar seed are Rs 51 crore and Rs 131 crore, respectively. NCDEX August average guar seed turnover is Rs 388 crore. Among precious metals, BSE currently offers trading in delivery-based futures contract of gold and silver. In the energy complex, BSE offers futures contacts in Oman Crude Oil, a tailored product for Indian oil producers and consumers.

According to the BSE data, it has facilitated delivery amounting to over 6.6 tonnes in precious metals and over 5,000 tonnes in agri commodities. 

The almond contract is not traded in futures market. Although this market is small, BSE looks for hedging from importers and consumers. Its proposed Brent Oil futures will be settled on Brent Oil price on ICE. The exchange plans to launch all contracts in the soya family, including oil, but it will start with soya bean in a contract specification that will differ from existing NCDEX futures and have many more delivery centres in Maharashtra, Rajasthan and MP.

Commodities derivative regulations now call for delivery-based settlement even in non-farm products. Energy commodities are an exception to this rule. As a result even metal futures have to be settled with delivery option. In view of this, BSE also plans to launch futures on aluminium, lead and zinc, adding to its existing portfolio of base metals. The exchange already has deliverable copper futures.

BSE was waiting for ODIN connectivity before expanding its basket, said the source. ODIN, the leading online trading platform in India now offers quotes of commodities traded on the bourse, widening the reach of the BSE platform.  

Sameer Patil added, "BSE is confident of its capabilities and with a number of new and innovative products, stress on continuous improvement and an established culture of serving its stakeholders."

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