In the metal segment, the NSe is working on mega contracts and trading in warrants issued by metal producers. The first of these will be a 25-tonne copper contract, for which the exchange is in talks with major producers who prefer large contracts and wants to hedge their risk. This will be followed by similar contracts in other base metals. NSE is also exploring potato, tur, urad among many other commodities.
Warrants are always marked for delivery and can be sold on the exchange. The MCX copper contract is for five tonnes and is fairly liquid. Bringing liquidity will be a challenge. NSE is also working on India gold good delivery norms to lure domestically refined gold for delivery on its platform.
So far, NSE has not been able to do much in terms of volume, while BSE has seen good interest in its agri contracts. A BSE spokesperson said the exchange plans deliverable contracts in base metals such as aluminium, lead, nickel, zinc and deliverable silver kilo bar contracts. Silver kilo bar has gteh potential of attracting several retail investors.
Egg is an interesting item for futures, but is quite perishable. However, some big poultry firms and large retails chains would prefer to hedge their requirements with egg futures. A source close aware of the development said, “The regulator is insisting on making egg futures settled in delivery.” He said that contract specifications will be crucial for success of of the product, which has vibrant spot market. Poultries can sell in their future produce and big retail chains, traders who have access to cold storages to stock egg powder, and other product makers would be buyers in futures once the contract is actually launched.
Other commodities that are not traded on any other exchange, according to the BSE spokesperson, include ginger, cocoa, potato, almond, betelnuts, coconut oil, tea and coffee. BSE is also planning to launch soya complex, groundnut oil and, if permitted, green products like ethanol. Other contracts under consideration are castor seed, turmeric, chana, maize.