India's leading commodity bourse - the Multi-Commodity Exchange - is in negotiations with the Andhra Pradesh government to set up spot exchanges in the state.
Addressing a press conference in Hyderabad on Monday, MCX director Anjani Sinha said the exchanges wants to create electronic markets for spot trading in Andhra Pradesh.
"We hope the state government would amend the Agricultural Produce Marketing Committee Act, which stipulates Rs 10 crore minimum investment for setting up private markets," Sinha said.
"We don't want to create auction yards or markets in the state and thereby the government stipulation on investment is a major hurdle in setting up spot exchanges. We are in talks with the government officials and it is expected that they will consider our request," he said.
"In order to participate in futures trading, one should have a minimum trade volume of 10 MT. It is not easy for marginal farmers to meet this requirement. With the help of rural banks, small farmers can pool in so that their aggregate trading volume will be 10 MT," Sinha said.
He said all the national commodity exchanges are now awaiting the Central Finance Ministry's permission allowing banks to participate in futures trading.
"Banks are not allowed in futures trading at present. The Reserve Bank norms do not permit banks to offer their services for aggregate volume trade. We expect the finance ministry to amend the rules by this year-end," the MCX director added.