| National
Spot Exchange
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Products
National
Spot Exchange is providing an unbiased and state-of-art platform for
buying and selling of commodities. Commodities traded on National Spot
Exchange include agricultural commodities, bullions, metals and some
Industrial products (to be introduced later). Commodity is traded in
contract form, which has standard quality specification. All contracts
are of single day duration having different settlement cycle depending
upon the commodity and market practices. The Exchange offers two types
of contract (Farmer’s contract and trader’s contract) in
agriculture commodity. Farmer’s contract is market cess unpaid and
has smaller lot size to facilitate even a marginal farmer to sell
their produce. Trader’s contract is market cess paid and usually has
larger trading lot size. A commodity may have multiple contracts based
on the market location, settlement cycle and lot size. Arecanut
Bajra
Barley Black
Pepper Castor Oil
Castor Seed Chana Copper
Copra Cotton
Bales
Cottonseed Wash Oil
Cumin Seed Gold
Groundnut (Peanuts) GuarGum
GuarSeed Maize
Masoor
Moong Paddy (Rice) Rajma RBD Palmolein
RMSeed
Silver
Soybean
Steel Sugar
Tur
Urad Wheat
Yellow Peas Main
aim of the Exchange is to bring a large number of buyers and sellers
on the same platform for spot price discovery and to make sure that
the commodity bought and sold on the Exchange is delivered on time
without the counter-party risks to the traders. The potential
participants / traders on the Exchange can be farmers, farmers
co-operatives, corporate, wholesalers, exporters, Importers,
processors, co-operatives / associations, government etc. Market timings Trading on the Commodities takes place on all days of the
week (except Sundays and holidays
declared by the Exchange). The market timings for trading
on the online platform of the Exchange are as under :
SETTLEMENT
CALENDER (DEMAT SEGMENT) FOR DECEMBER 2010 In terms of the
provisions of Rules, Bye-Laws and Business Rules of the Exchange the
Settlement Calendar for the month of December 2010 for the Demat
segment has been notified as under:
Members please be noted that while calculating the settlement
cycle, Saturday, Sunday and bank holidays are not considered. The
settlement cycle details of the above contract are mentioned in the
respective circulars. Annexure
– 1
3 Annexure
– 2
Market Types The National Exchange for Spot Trading (NEST)
system supports two types of markets.
·
Auction Market Spot market In Spot market,
single day trading contracts are traded. The contracts open every day
for trading and the position open at the end of the trading session
results into the compulsory delivery of the commodity traded. The
electronic Spot market platform is many-to-many market structure. For
each contract, Exchange has identified a particular delivery location or
additional warehouses where the commodities can be delivered and lifted
by the sellers and buyers respectively.
Auction Market In the auction
market, the electronic bidding is open for the specific brand of
commodity for few hours during the day. The auction market structure is
one to many. Auction trading mechanism is further divided into two
forward auction and reverse auction. In forward auctions a single seller
is selling their resources to multiple buyers. Alternately, in reverse
auctions, a single buyer is sourcing resources from multiple suppliers,
as is common in procurement.
Actively
traded metals products : For the first time in India, National Spot
Exchange (NSEL) has introduced investment products called E-Series in
commodities. Retail investors can trade and investment in commodities
like they invest in the equities on an Exchange platform.
E-Series products in gold, silver and copper
from NSEL are backed by physical delivery and are stored in the
exchange's secured warehouses/vaults, while trading takes place in demat
form. An investor can trade in these investment products after opening a
demat account with any of NSEL's empanelled DPs. E-Gold and e-Silver are
ideal products for retail investors, who want to invest small amounts in
gold and silver. These investors can take advantage of recent rally of
gold and silver. Moreover, e-Gold and e-Silver gives investors the
option and facility to take physical delivery across various locations
in India at a single price without having to worry of either purity or
weight. E-Gold and E-Silver are demat units of the physical gold and
silver which are traded in electronic form at NSEL. The very concept of
e-series products is to provide investors a mechanism whereby they own
the commodity which is reflected through their demat accounts while the
equivalent physical commodity is maintained at the Exchange’s
designated vaults. There is a growing demand for a cash segment in
commodities from retail investors. Investing in
Silver Electronic Way
Investing in silver electronically or through Index
Funds had not been possible in India till recently. Over the recent
months, there has been a noticeable increase in the popularity of
silver. Not only is it gaining against various currencies, but it also
seems to be outperforming gold, it is most favourite counterpart. Many
experts feel that, silver could prove to be a better investment
alternative than gold, as it requires lesser capital, and provides an
equally good hedge against inflation and economic volatility. So how do you invest in Silver? Up to a couple of years back, the only way to
invest in silver was to physically buy them from the store. With the
opening up of newer trading mechanisms in the last few years, more ways
of purchasing silver have emerged. E-Silver, an initiative of National
Spot Exchange Limited or NSEL, now lets you invest in silver
electronically. So instead of just stocking up those silver bars and
jewellery in your safe deposit locker, E-Silver could well serve your
purpose. It could satisfy your traditional requirements as well as add
value to your portfolio. The E-Silver Product Part of NSELs E-series, E-Silver lets you
purchase physical silver of 99.9 percent purity electronically and hold
them in demat form. You could buy and accumulate silver in small
denominations of up to 100 grams, and even liquidate them into physical
form if required. The physical silver involved in the trade is stored by
NSEL in Exchange Designated Vaults. Features of E-silver Assured safety of the metal at nil storage
costs. NSEL recently waived the storage costs associated with E-Silver
contracts, making it an attractive and cheaper investment option. Assured purity of 99.9 percent. Available in small denominations. E-silver could
be traded in denominations as low as 100 grams each, making it
affordable even to small retail investors. Option of taking physical delivery of the metal
in the form of silver bar or coin, if required at any point of time.
Delivery of physical silver could be in multiples of 500 grams, 1 Kg or
5 kg, at NSEL centers. Simple and seamless process of buying and
selling. Trading could be done easily through any empanelled depositary
participants. Some DPs also offer trading facilities through telephone
or online trading terminals. Investment Procedure For investing in the E-series, you would require
a separate demat account with any one of the empanelled Depository
Participants or DP of the NSEL. The list of DPs could be found on the
NSEL website (www.nationalspotexchange.com/eseries.htm) Trade
Settlements of the E-Series is similar to that of equities, of T plus 2
days. Charges Associated All investments in E-series attract a custody
charge, which includes vault and insurance charges, of 60 paise per
month. Charges are applicable on the number of units held in the demat
account on the last Saturday of every month. Suppose an investor buys
and sells his units during the course of the month, and holds nil units
on the last Saturday of the month, no custody charge is to be paid.
During conversion of units to physical silver, unit holders would have
to pay VAT/GST and other local taxes, as applicable in the place of
delivery. For delivery of silver in the form of coins, the exchange
would also levy making and packing charges. E-Silver, a Silver Lining to Your Portfolio When we look at the price of silver, ending
30-Sep-2010, the metal closed at Rs 33,350 per kg versus last years
closing of Rs 26,040 on the same date. The price of the metal has
appreciated by around 28 pecent. Though considered more volatile than
gold, the metal has the potential to appreciate more than gold, owing to
its increasing industrial demand. Of course given the current Bull Run,
the risks associated with investment in any metal, looms over a silver
investment too. On the positive side, whether you are looking for a
diversification in your portfolio or for marriage and ceremonial
requirements, E-silver could well be a good option, without having to be
bogged down by issues such as security. Its transparent and simple
mechanism is a value for your money and portfolio.
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