Six more commodities added in the trading exchanges

Six more commodities were added to the list of products notified on September 28, 2016  for derivative tradings on the exchanges.

• In consultation with markets regulator Sebi and on suggestions of an expert committee headed by NITI Aayog member Ramesh Chand, the government has notified a consolidated list of 91 commodities, up from 85 so far, on which derivative contracts can be launched and traded on the exchanges.

What are they?

The new commodities include cocoa, pig iron, brass, tea and eggs and diamonds.

Committee suggestions:

The committee had suggested a total of eight additions to the list but only six have been added. The notification has come into effect from September 29, 2016.

SEBI Role:

The Securities and Exchange Board of India has allowed the introduction of options contracts in the commodity derivatives market. Currently, only futures contracts are available in the commodity segment.

• Based on the recommendations of the Commodity Derivatives Advisory Committee (CDAC), it has been decided that commodity derivatives exchanges shall be permitted to introduce trading in options.
• The commodity derivative space is dominated by the Multi-Commodity Exchange of India (MCX) and the National Commodity & Derivatives Exchange Limited (NCDEX). MCX, with its dominance in metals and energy commodities, has an over 90 per cent market share with NCDEX creating a niche in the agri-commodity space.