Spot Exchange To Be Unveiled

Mumbai: MCX subsidiary National Spot Exchange for Agriculture Produce (NSEAP) is set to unveil the country's first spot exchange on an electronic platform in Gujarat during September. They will commence marketing for membership from July-end and hope to rope in at least 500-600 across the country. Unlike the various categories of membership in MCX, there will be only trading-cum-clearing members in NSEAP. Apart from bringing in much-needed transparency in price discovery, the electronic spot exchange is expected to minimise the role of intermediaries and enhance price realisation for farmers. With the help of the electronic platform, a spinning mill in Coimbatore will be able to place an order for cotton from Gujarat through an NSEAP-approved member. Earlier the company had little option but to call up a broker in Gujarat to get a quote before deciding on purchase.
The platform will enable traders to hold their commodity in demat form by opening an account with National Securities Depository Ltd and Central Depository Services Ltd. The larger the demand, higher the price will be the basis for price discovery. To tackle quality related problems, the exchange will offer premiums and discounts depending on quality of produce on offer. Farmers will also have the option of subjecting their produce for testing before delivery to the warehouse or on delivery and obtain a receipt. To begin with there will be 15 contracts of castor seed, groundnut, jeera, cotton and sesameum for trade.