NMCE - National Multi-Commodity Exchange of India Ltd

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Yesterday, I was seeing DD News and in the last of screen, I was seeing many updates about NMCE. So, I was interested to know about NMCE. By simple search on Google, I got the the Site of NMCE from where, I knew about NMCE. NMCE means National Multi-Commodity Exchange of India Ltd. It is Indian company who is providing the facility of exchange of products like Precious Metals, Metals, Agricultural. In other words it is that commodity exchange or market where you can buy or sell its commodity products online. NMCE's head office is at 4th Floor, H K House, Ashram Road,Ahmedabad – 380 009, Gujarat, INDIA.

Objectives of NMCE

National Multi-Commodity Exchange of India Limited is providing world class services of on-line screen based Futures Trading of permitted commodities and efficient Clearing and guaranteed settlement, while complying with Statutory / Regulatory requirements. It shall strive to ensure continual improvement of customer services and remain quality leader amongst all commodity exchanges.

•Improving efficiency of marketing through on-line trading in Dematerialization form.

•Minimization of settlement risks.

•Improving efficiency of operations by providing best infrastructure and latest technology.

•Rationalizing the transaction fees to optimum level.

•Implementing best quality standards of warehousing, grading and testing in tune with trade practices.

•Improving facilities for structured finance.

•Improving quality of services rendered by suppliers.

•Promoting awareness about on-line features trading services of NMCE across the length and breadth of the country.

Promoters of NMCE

1. PNB
2. CWC
3. NAFED
4. NIAM
5. GAICL
6. GSAMB

How to Get Membership in NMCE

There are many ways to get membership in NMCE.

1st way : For becoming Trading com clearing member (TCM), you have to pay total Rs. 725000 in which annual subscription is also included.

2nd way : For becoming just Trading member (TM), you have to pay just 85000 in which annual subscription fees is also included.

How to Deal in NMCE

You can deal in NMCE by choosing any of following market where you have to deal online.

Ready Delivery Market

Cash Trades

Cash Trades are done for one hour in the day and are settled the same day. The Seller has to deliver the warehouse receipt and Buyer has to make payment before the closure of the banking hours. On receipt of payment from the Buyer, Clearing House will release and endorse the warehouse receipt in favor of the Buyer. All the trades are settled individually on trade for trade basis.

Spot Trades

Spot Trades done for two hours in the day are settled on the third day from the date of transaction. The settlement is done on T+2 day i.e. trade done on Monday will be settled on Wednesday. The Seller has to deliver the warehouse receipt and Buyer has to make payment before the closure of the banking hours on the third working day. On receipt of payment from the Buyer, Clearing House will release and endorse the warehouse receipt in favour of the Buyer. All the trades are settled individually on trade-for-trade basis.

Weekly Trades

Trades for weekly settlements are done during the prescribed hours in the day are settled on the fifth day from the date of transaction. The settlement is done on T+5 rolling day i.e. trade done on Monday will be settled on next Monday. The Seller has to deliver the warehouse receipt and Buyer has to make payment before the closure of the banking hours on the fifth working day. On receipt of payment from the Buyer, Clearing House will release endorse the warehouse receipt in favour of the Buyer. All the trades are settled individually on trade-for-trade basis. The transactions are not netted for the purpose of settlement.

Auction Market

Auction Market is used by the Exchange to close out the positions of the members who have failed to pay-in their obligations. In the Auction market, the trading member can participate in the auctions initiated by the Exchange only. The counter orders can be entered only during Auction period.

Futures Market

The Futures Market is primarily intended for Hedging and Speculation. Contracts in Futures Market results mostly in Cash Settlement and do not frequently result in delivery. The Clearing House guarantees trades executed on the exchange. Contracts that are not closed out and are due for delivery will be delivered and settled through the warehouse receipts. NMCEIL is having 12 delivery month contracts as separate contracts for each commodity being traded at NMCEIL. All contracts are settled on daily basis at the daily settlement price till the final delivery of commodity on the expiry date.

Futures market consists of various book types wherein orders are segregated as Regular lot orders, Special Term orders, Negotiated Trade Entries and Stop Loss orders depending on their order attributes. All orders have to be of regular lot size or multiples thereof.

Specific Delivery Market

These contracts will have delivery obligation maturing beyond a period of 11 days

The terms of delivery of commodities may vary from trade to trade as decided by the contracting parties at the time of entering into transaction. Such specific terms could be related to delivery date, delivery center, quality of commodity, pricing basis (FOB, CIF), payment terms etc.

The transactions are not done on anonymous basis i.e. transactions are done knowing the counter party.

Both the parties to trade enter into transactions after knowing the terms of contract, which may vary from trade to trade. However, there are standard definitions for various terms of contracts.

Exchange will monitor performance of these contracts and if required, impose mark to market margins on the open, unsettled contracts depending upon the volatility in the commodity.

All the members entitled to trade in a commodity will be allowed to trade in these Specific Delivery markets.