NCDEX introduces forwards contracts segment Agrim Sauda

KOLKATA: The National Commodity & Derivatives Exchange on Wednesday announced the launch of forwards contracts on its national-level electronic platform.

The facility, named Agrim Sauda, will be available from Thursday, initially for sugar and maize. It will be extended to other commodities later.

The forward contracts will offer the benefits of transparent trade practices and national market reach through registered farmer producer organisations.

The introduction of Agrim Sauda is expected to help integrate the commodity ecosystem leading to a more developed and efficient agriculture market.

“India needs well-functioning agricultural markets where rising incomes improve the lives of millions of farmers and high-quality food can reach 1.25 billion consumers, thereby becoming an integral part of inclusive growth transformation,” said Samir Shah, managing director and chief executive of NCDEX. “With this initiative, NCDEX is attempting to bring real inclusiveness in the real economy.”

In addition to farmers, Agrim Sauda will help almost every participant in the segment, including processors, exporters, traders and government procurement agencies.

This may also make price predictability less onerous and is likely to contribute in the development of storage infrastructure for traded commodities in and around major producing and trading areas. With this initiative, a buyer or a seller from one part of the country has the benefit of being able to buy or sell any commodity in any part of the country.

NCDEX is providing opportunity for physical market players to reduce counter-party default risk by executing their bilateral trade under the regulatory framework of the exchange as also the Forward Markets Commission, without having to give up their comfort of trading in contracts customised to their needs.

Unlike the futures contracts wherein the contract specifications are standardised, the exchange-traded forward contracts will allow trading parties to negotiate quantity and also quality of the underlying commodity, date and place of delivery and settlement price as per their mutual requirements.