Trade in Gold, Silver Futures From Oct 3.

October 2, 2003

NEW DELHI: Futures trading in gold and silver is set to be relaunched from October 3, after a span of more than four decades. The National Multi Commodity Exchange of India Ltd (NMCE), Ahmedabad, is all set to start futures trading in gold and silver from that date on.

Markets Commission (FMC), the regulator of commodity exchanges, has already given the necessary clearance for starting futures trading in these two commodities.

Inaugurating a function here to formally announce the relaunch of futures trading in these two commodities, the minister for Consumer Affairs, Food and Public Distribution Sharad Yadav pointed out India had a reasonably thriving bullion (gold and silver) futures market before the 1960s when it was banned along with other commodities for futures trading. Forward trading in gold was partly liberalised during 1998-99 through the gold deposit scheme when specified parties like Scheduled Commercial Banks wer allowed to enter forward contracts in gold. However, since it was still a restrictive product, full befit of market based risk management and price discovery futures were not available to the public. With the inauguration of Exchange, trade in futures contracts in gold and silver will reflect the need of the people, minister Yadav said.

Gold futures trading in India is aimed at giving the country an opportunity to determine the price of gold for the global gold market. India is the world’s largest consumer of gold at 800 tonne. It is estimated that bullion traders and speculators hedge and speculate in gold futures to the extent of Rs 1000 crore. The size of the gold jewellery market in India is an estimated Rs 40,000 crore.

The NMCE is a Central Warehousing Corporation-led exchange with a current membership of 89 participants. Its present network covers 25 cities and the commodities include oilseeds, oils, metals and plantation corps.

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