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Why NSE entered gold and silver futures

October 26, 2018 11:40 IST

'We have entered the commodity space with a long-term view.'

Photograph: Reuters

At the launch of commodity futures, Vikram Limaye, managing director and chief executive officer, NSE, tells Dilip Kumar Jha: "We are not looking at a fixed tenure for breaking even or earning profit from the commodity segment."

You have entered gold and silver futures. What are your plans for one year later?

The launch of commodity futures is a function of regulatory approval.

We have launched gold and silver contracts and have applied to the regulator for crude oil and copper contracts' approval.

In the second phase, however, we are planning to enter the agri commodities space, for which research is still on for identifying commodities.

Our agri foray may not happen for a couple of quarters, but later it will.

On achieving a regulatory threshold, we would look at options as well.

 

Other exchanges also offer futures trading in bullion, gold and silver. What is the NSE's differentiator from other players in the similar field?

For traders, liquidity is the biggest differentiator.

We achieved good liquidity in whatever segment we entered.

Hence, traders can get the advantage of liquidity, a sound delivery mechanism, etc.

Apart from that, we are also looking into either existing contracts or their variants otherwise for future contract launch.

The NSE holds 15 per cent in the NCDEX, the exchange offering trade in commodities. Won't it be a clash of interest?

We have just one board seat on the NCDEX.

We don't participate in the decision-making process.

But we don't have any plan to reduce our stake in the NCDEX.

We will see which commodities are liquid on other exchanges before launching agri contracts on our platform.

You have waived transaction charges initially for three months in commodities. What would be your break even turnover level in the commodity segment based on the current capital infusion?

We have entered the commodity space with a long-term view.

Hence, we are not looking at a fixed tenure for breaking even or earning profit from the commodity segment.

We see immense potential in the commodity segment.

How do you co-relate spot and futures trade in bullion and where does the NSE fit into it?

The government is yet to frame the guidelines for the spot bullion exchange.

We would look into the possibility of entering the spot bullion trade as well.

But nothing is decided yet.

Only the future will tell whether we are going alone in the spot bullion trade or with some other players.

What is your strategy to bring in corporate participation on the NSE platform?

We are in constant touch with small and medium enterprises to attract their participation.

Our aim is to bring to our platform large companies who hedge their commodity risk on overseas platforms.

Dilip Kumar Jha
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