MUMBAI: India's commodity futures market is set to undergo a sea change this year.
The Securities and Exchange Board of India (Sebi) will approve the launch of new products like options and indices in non-farm commodities, to begin with, and is likely to allow new players into the 12-year-old market later this year, two Sebi officials have told ET.
The finance minister is likely to refer to the development while presenting the Budget for fiscal year 2017, one of them stated.
"There is a need to deepen this market and to increase liquidity therein," said one of the officials. "One way is through the introduction of new products like options and indices and to open up participation to new players," he said without elaborating on who the "new players" would be. "New products will first be considered in the non-farm segment like gold, silver and crude futures and then a call would be taken on the agri basket," the other official said.
Non-farm futures are traded on MCX, the country's largest and only listed one, while farm futures are traded on NCDEX. The country's oldest, but smaller agri commodity bourse, NMCE, also offers products like jute and rubber futures trading.
Parveen Kumar Singhal, joint MD, MCX, said, "We are ready to launch products if and when we get regulatory approval to do so."
Samir Shah, MD & CEO, NCDEX, said that the exchange was in "readiness" to launch products like options and indices as and when the regulator approved of the same.
MCX is the leader with roughly 87 per cent market share, followed by NCDEX (approximately 10-12 per cent) and NMCE the rest. In the fiscal year to date, MCX posted average daily turnover of Rs 21,424.8 crore, followed by NCDEX at Rs 4,252.4 crore.
When the three bourses began operations in 2003, they offered only futures trading in commodities like gold, silver, crude oil, pulses, sugar, wheat, rubber, etc. Since then, participation has been restricted to a few corporates, a large number of small traders, processors and speculators.