Multi Commodity Exchange of India has asked for regulatory
approval to list a 100g domestic gold future. It already offers
a 100g mini-gold contract for imported gold and a 1kg gold
contract. The smaller contract is more popular.
Lamon Rutten, the exchange’s chief executive,
said the main reason for the contract was convenience for
users. The problem with the imported gold contract is that once
the gold is in India, it is no longer classed as imported and
cannot be delivered to satisfy an imported contract. These
logistical difficulties would not exist with a domestic
MCX’s rival, the National Commodity and
Derivatives Exchange, lists three gold contracts –
gold futures of 1kg and 100g and an international gold
contract. The gold 100g and gold international contracts have
traded since January 2009 but the 1kg gold future has not
traded since April 2009.
It is possible that Indian exchanges will be able to grow
when parliament reviews the Forward Contracts (Regulation) Act
"It constrains us in several ways... It only recognises
futures on tangible commodities," said Rutten.
The exchange cannot list freight or diamond products for
this reason. The act is likely to be reviewed in a process
starting in December, and any liberalising moves will give
exchanges more flexibility.
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