Trading on Spot Exchange platform is the trading of an actual physical
commodity at the current market price. Current delivery price of a commodity traded in the
spot market, comply with the price in which goods are sold for cash and delivered immediately through the spot
exchange platform. This platform provides customized services relating to storage,
procurement and disposal of commodities through online trading system.
Indian Spot Exchanges
- National Spot Exchange Ltd.( NSEL)
- NCDEX Spot Exchange (NSPOT)
What the Spot Exchanges can provide?
- Enable better price realization for the farmers, Traders & other participants.
- Enable lower cost of purchase for buyers.
- Involve a larger number of participants from around the country enabling both the farmers and the end users to reach more people thus effecting a better bargain for both.
- Larger number of participants would also ensure higher liquidity
- Removing/minimizing the chain of intermediaries, which are mainly responsible for the price aberration. This can have an indirect effect on the reduction in the price of the commodity that the ultimate consumers pay.
- Reducing/eliminating the dependency of farmers on middlemen for selling their product.
- Evolving a transparent and efficient system of trading through electronic system leading to fair price discovery an efficient system would erase any sort of manipulation.
- Making the entire operation fast and easy for both farmers and buyers.
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How to Trade?
In simple words, one can buy / sell the Commodity from the Spot platform.
- You must have a trading account with Religare Commodities Ltd.
- You must have a valid sales-tax registration but in case the client do not have a sales-tax number; one can take the help of Religare commodities Limited.
- Farmer/Seller bring his goods to the warehouse
- The stocks are assayed Quality checked and the goods weighed
- If the quality is validated, the warehouse receipt is issued
- The seller goes to the designated Spot Exchange member with the receipt and a limit is opened for the quantity to be traded on the Exchange
- Once the transactions are completed at the mutually agreed price between buyer and seller, the delivery and settlement aspects are done as per rules of the Exchanges.
- Access to larger number of buyers throughout the country: thus increasing not only his reach but also his bargaining power. The farmer wont be at the mercy of a few influential traders in the locality
- Accurate, transparent, online information of prices: without risks of manipulation
- Increased trade: The Spot Exchanges will ensure assurance of a standard quality for the buyer. It will help generate interest for big players like Corporate, exporters, who would be interested more in the quality aspects. Delivery assurance to buyers can attract bigger players into the market as there will be no counter party risk in the trading system. Possibility of huge volumes of trade can also be a positive factor for the large players
- Better storage and handling system: will cut damage costs especially for perishable items
- Arbitrage opportunities: as farmers can benefit from trades in the same commodity on both the spot and the futures market
- Improved Technology: can help the farmer to expect that the deals would be completed and he will get his payments fast