The subprime virus is spilling over to commodities. Prices of metals like copper, zinc and lead are on the slide and volatility is creeping into commodity trading.But the commodity exchanges are not ready to take any chances. NCDEX has asked its 900-odd members to maintain their minimum net worth of Rs 50 lakh. Members falling short have been given time till the month-end to shore up their net worth.
NCDEX says that compliance rate among members is 96-97 per cent. MCX is also closely monitoring the net worth criteria for members.
"Members need to have the financial resilience to absorb shock from their clients. So what is important is not just to have the net worth at the point of entry but to maintain it throughout. So if it falls, they will have to infuse fresh capital or they will have to give up membership," said PH Ravikumar, MD & CEO, NCDEX.
While NCDEX is not in any rush to sign up new members, the commodities exchange is scouting for new partners for its power exchange that it is building with NTPC and NHPC.
NCDEX-NTPC-NHPC is trying to rope in Power Grid and Power Finance Corporation as partners and total investments for the power exchange is being worked out.
"We don't want financial partners, we want strategic partners and all of us are open to the idea," said Ravikumar.
Commodities exchanges realize that in volatile times like these it is even more important that members don't falter on net worth. This is one the critical ways of ensuring that commodity trading do not face hiccups especially when the going gets difficult.
Source : www.indian-commodity.com
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