NSEL launches “Cash” segment in Commodities for the first time in India
Kolkata, June 23, 2010: Today, National Spot Exchange(NSEL) announced its plan to launch 15 commodities under E-Series for developing a full-fledged “cash” or “investment” segment in commodities. This is happening for the first time in the history of commodity market in India.
Commodity Exchanges are generally known for providing a hedge instrument for protection against price risks. But, they do not provide an instrument for investment; where retail investors can park their funds with a view to enjoy price appreciation. In order to cater to this need, it is need of the market to develop and launch investment products in commodities. This will give birth to a niche segment of commodity market investors, who wish to diversify their portfolio by parking part of their surplus funds into commodities.
Under E-Series, NSEL has already launched “E- Gold” and “E- Silver”, which have attained high degree of success and popularity among retail investors. Now, NSEL is all set to launch contracts such as E-Copper, E-Zinc, etc. which will expand its product basket under E-Series.
The product is designed to reach the masses across the country. Investors can now trade and invest in gold and silver in smaller denominations of 1 gram and 100 gram respectively, in demat form, just like shares.
An individual interested in trading in E-Series product has to open client account with a member of NSEL and a beneficiary account with a DP empanelled with the Exchange. This is required for holding E-Series units in demat form. Thereafter, he can buy and sell E-Series products either by placing orders through the member on the phone or by trading on line. In case of buy transaction, the investor is required to pay the purchase value before T + 2. The units are credited into his account on T + 2. In case of sale, he has to transfer units from his beneficiary account to his broker’s pool account, while the broker transfers sale proceeds to him on T + 2 basis.
The investors are allowed to do intraday trading, but all positions outstanding at end of day must result into delivery. In case of non delivery, the Exchange conducts buying in auction to cover short deliveries and selling out auction to cover buyer’s position. But, in both cases, the Exchange guarantees delivery to the buyer and payment to the seller.
The product is suitable for retail investors, house hold and the industry as a whole. The main advantages of NSEL’s E-Gold and E-Silver are transparent pricing, seamless trading, easy entry and exit, lower holding cost and pan India accessibility. Investors can invest in E Gold and E-Silver without worry for daily MTM pay in/ payout and roll over issues as applicable in derivative market. Liquidity, i.e. any time buying and selling of commodity is possible with hassle free low cost transaction in physical commodity. Also, there is no risk of commodity custody/theft. The storage charges of holding gold in demat form is Rs.0.60/unit/Month.
The Exchange has empanelled eminent players of the stock market as its Depository participants such as Eureka, Microsec, Ashika, Globe Capital, Religare, Karvy, Goldmine, IL&FS, Monarch capital, SMC, SSD securities, SHCIL etc. Clients, who have opened beneficiary accounts with any of the empanelled DPs are eligible to participate in these contracts from Mondays through Fridays from 10:00 am to 11:30 pm. Physical delivery of gold / silver is possible, at any point of time, in the form of gold coins/ bars from any of the specified centers i.e. Ahmadabad, Mumbai, Delhi and expanding further to other states.
Commenting on the development Shri Anjani Sinha, MD & CEO, NSEL said, “The significant growth of NSEL within a short span of one year reflects the trust imposed by the stakeholders and the strength of NSEL offering, E-series being one of them. E-Gold and E-Silver are the unique investment products, which will create a revolution in terms of development of cash segment in commodities. A small investor willing to invest Rs. 2000 or an HNI, willing to invest Rs. 5 lacs, can buy gold or silver at the same price because of the transparent, efficient and affordable platform. We are excited about launching new products and further expanding our base to every nook and corner of the country in the months to come. This has created a new business opportunity for stock brokers, who were otherwise worried about dwindling investors’ volume in stock market. Investors, who are worried about stock market volatility are also finding it more suitable to diversify a part of their portfolio into commodities through such investment products.”
About National Spot Exchange Limited
National Spot Exchange Limited (NSEL) jointly promoted by Financial Technologies India Limited (FTIL) and National Agricultural Co-operative Marketing Federation of India Limited (NAFED), is a national level institutionalized, electronic, and transparent spot exchange. NSEL is poised to transform the rural economy by way of improving marketing efficiency for agricultural produce. It is a state-of the-art organized and structured market place providing facilities for risk fee and hassle free procurement and disposal of farm produce. The Exchange provides customized solutions to various problems faced by the farmers, traders, processors, exporters, importers, arbitrageurs, investors and the general mass relating to agricultural marketing, storage, warehouse receipt financing, etc.
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