Moneycontrol
Oct 13, 2017 02:04 PM IST | Source: Moneycontrol.com

MCX plans to set up spot exchange for commodities trading

It could be difficult for MCX to win over trust of investors once again four years after NSEL scam came out in public

Multi Commodity Exchange plans to set up a spot exchange for commodities trading, sources tell Moneycontrol. This comes four years after National Spot Exchange’s (NSEL’s) scam came out in public.

Sources tell Moneycontrol that MCX will seek assurance from the finance ministry and Securities and Exchange Board of India (SEBI) on regulations for the operations.

A source close to the development told Moneycontrol: “MCX is exploring the option of spot exchange for base metals and precious metals. However, the exchange will not move ahead without knowing a proper regulator in this space.”

As of now, there is no specified regulator or regulations for operating a spot exchange. The government had announced plans to integrate spot market and even set up a committee for the same in the Union Budget. It is in process of framing new guidelines for spot exchanges.

Another source told Moneycontrol: “The matter has been discussed with the regulator. Spot exchange is beneficial for MCX as it is already providing a trading platform for futures trading. Now if it starts spot facility also, that will benefit traders as well.”

It could be difficult for MCX to win over trust of investors once again. Financial Technologies (FTIL), which owned stake in MCX and NSEL, had to sell its stake in MCX after NSEL failed to repay investors.

National Commodity and Derivative Exchange had briefly started Forward contracts before the merger of SEBI and Forward Market Commission. But post the merger of the two regulators, SEBI shut down the operations.
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