The National Commodity and Derivatives Exchange (NCDEX) is all set to launch the ‘guar seed options’ contract on the occasion of Makar Sankranti to be held on January 14.
The online commodity exchange had received the Securities and Exchange Board of India’s approval for the launch nearly four months ago, but waited for an auspicious occasion for its official launch.
With this, guar would be the second commodity, after gold, in which options contracts can be traded. The country’s largest commodity derivatives trading platform, Multi Commodity Exchange (MCX), had launched ‘gold options’ contract in October this year.
The guar seed options contract will begin a new era of electronic trading of agricultural commodities. According to traders, options trading in agricultural commodities would bring substantial volume to the exchange platform, with increased participation from small farmers.
“NCDEX guar seed options are an important hedging tool that will prove to be a game changer for farmers. Looking at its importance for agri-commodity markets, we wanted to select a date which will have a definite significance for the farming community of our country. We will be launching our agri-commodity options on the auspicious occasion of Makar Sankranti, a key harvest festival, and will dedicate this new hedging tool to farmers of India,” an NCDEX spokesperson told Business Standard.
It would be interesting to see how traders respond to the guar seed options as gold options failed to attract adequate volume on MCX, which prompted India’s largest commodity exchange to seek regulatory approval for a liquidity enhancement scheme.
After achieving the Rs 397 crore of daily average turnover in October, first month of the launch, gold options contract witnessed a sharp decline in traders’ interest. The daily average turnover in gold options declined to Rs 61 crore in December (by 21st).
Analysts, however, said guar seed options would attract a phenomenal volume on NCDEX.