Commodity exchanges: Regional, National & International

A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures.  As of now there are six commodity exchange market in India.

Commodities exchange is an exchange, or market, where various commodities are traded. Most commodity markets around the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, and metals). Trading includes and various types of derivatives contracts based on these commodities, such as forwards, futures and options, as well as spot trades (for immediate delivery).

A futures contract provides that an agreed quantity and quality of the commodity will be delivered at some agreed future date. A farmer raising corn can sell a futures contract on his corn, which will not be harvested for several months, and gets a guarantee of the price he will be paid when he delivers; a breakfast cereal producer buys the contract and gets a guarantee that the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises. Speculators and investors also buy and sell these contracts to try to make a profit; they provide liquidity to the system.

Some of these exchanges also trade financial derivatives, such as interest rate and foreign exchange futures, as well as other instruments such as ocean freight contracts and environmental instruments. In some cases these are mentioned in the lists below.

These six exchanges are explained below one by one.

1. National Multi Commodity Exchange:

Establishment: 2002

Headquarter: Ahmedabad

Promoters:

• Central warehousing corporation
  • Gujarat State Agricultural Marketing Board
  • Gujarat Agricultural Industries Corporation Limited
  • National Institute of Agricultural Marketing
  • Neptune Overseas
  • Punjab National Bank

Trading Commodities:

• Castor Seeds
  •  Rapeseed
  •  Mustard
  •  Soyabean
  •  Seasame
  •  Copra
  •  Black Pepper
  •  Gram
  •  Gold
  •  Aluminum
  •  Copper
  •  Lead
  •  Nickel
  •  Zinc
  •  Rubber
  •  Jute
  •  Coffee
  •  Isabgoal

2. Multi Commodity Exchange of India Ltd (MCX):

Establishment: Nov. 2003

Headquarter: Mumbai

Achievements:  MCX holds 86% market share of commodity exchange in India. It operates in more than 40 commodities. It is the world’s largest exchange in silver and gold.
Promoters:
• National spot exchange limited, India energy exchange, Singapore mercantile exchange global board of trade, IBS Forex, National Bulk Handling Corporation, ticker plant lilited.
Trading Commodities:
• Metal
• Bullion
• Fibre
• Energy
• Spices
• Plantations
• Pulses
• Petrochemicals
• Cereals

3. National Commodity and Derivatives Exchange Limited (NCDEX)

Establishment: Dec. 2003

Headquarter: Mumbai

Promoters:  ICICI Bank, LIC, NABARD, CANARA BANK, PNB, CRISIL, IFFCO, Goldman Sachs, Intercontinental Exchange, Renuka Sugar, J.P. Capital

Commodity Traded: It facilitates the trade of 57 commodities.
• Cereals and pulses
• Fibres
• Oil and oil seeds
• Spices
• Plantation products
• Gold silver
• Steel
• Copper
• Crude Oil
• Brent Crude Oil
• Polyvinyl chloride
4. Indian Commodity Exchange (ICEX):

It is a screen based online derivatives exchange for commodities.

Establishment: Nov. 2009

Headquarter: Gurgaon

Promoters:  It has Reliance Exchange Next Ltd. as anchor investor and has MMCTC ltd. India Bulls financial Services Ltd, Indian Potash Ltd., KRIBHCO and IDFC.

Commodity Traded:
• Gold
• Silver
• Copper
• Lead
• Crude oil
• Natural gas
• Mustard
• Soyabean
• Soyabean oil
• Jute
• Menthe oil
• Iron ore

5. Shariah Index

The Bombay stock exchange and Taqwaa advisory and Shariah investment solutions have launched it.

Establishment: Dec. 2010

Headquarter: Gurgaon

This is the first Shariah index created in India utilizing the strict guidelines and local expertise of a domestic Shariah Advisory Board. The index comprises the 50 largest and most liquid shariah compliant stocks within BSE-500.

6. Universal Commodity Exchange:

It’s a national level electronic commodity exchange in India.

Establishment: April, 2013

Promoters: Commex Technology, IDBI Bank, IFFCO, NABARD and REC.

Commodity Traded: It deals in 11 commodities.
• Gold
• Silver
• Crude oil
• Chana
• Rubber
• Mustard
• Soyabean
• Refined soya oil
• Turmeric

International

The major commodity exchanges can be listed here as under on the basis of their continent wise location.

• London Metal Exchange (LME) – Europe

It is a future exchange with a large market for options in metals. It is considered as a world’s major market for non-ferrous metals.

• Climax – Netherlands – Europe

This is an exchange for energy contracts and environmental commodities.

• Chicago Mercantile Exchange (CME) – USA

It is a derivative and commodity market. It offers a range of future and option contracts.

• New York Mercantile Exchange (NYMEX) – USA

It is the largest commodity futures exchange in the world in physical terms.

• Dubai Mercantile Exchange (DME) – ASIA

This is the first energy futures exchange for the Middle East The main trade is the Oman oil futures contract.

• Zhengzhou Commodity Exchange (ZCE) – ASIA

This is the futures exchange in commodities like agriculture and chemicals located in China

• Multi Commodity Exchange (MCX) – ASIA

This is an independent commodity exchange based in Mumbai.

• Tokyo Commodity Exchange (TOCOM) – ASIA

It is a nonprofit organization. It regulates option and future contracts of all commodities.

• Singapore Exchange Limited (SGX) – ASIA

It offers equity index futures and options, interest rates options.

• Australian Securities Exchange (ASX) – Australia

It is an electronic exchange for trading in various commodities.