e rit ar et in ndia 14.9
The facilities provided by the spot exchange, different price perceptions, as the buyer
like a normal stock exchange, include clearing or seller merely expresses their desire to
and settlement of trades. Trades are settled on trade without even meeting directly.
guaranteed basis (i.e., in case of default by any (iii) Ensures participation in large numbers
person exchange arranges for the payment of by farmers, traders and processors across
money/good) and the exchange collects various the country and eliminate the possibility
margin payments, to ensure this. The exchange of cartelisation and other such unhealthy
also offers various other services, such as, quality practices prevalent in the commodity
certification, warehousing, warehouse receipt markets.
financing, etc. (iv) It brings in some best practices in
commodity trading like, system of
sPot exchAnges in inDiA grading for quality, creating network
At present, there are four spot exchanges operating of warehouses with assaying facilities,
in the country: facilitating trading in relatively smaller
(i) The National Spot Exchange Ltd. quantities, lower transaction cost, etc.
(NSEL), set up in 2008, is a national level (v) Bank finance available against the
commodity spot exchange promoted goods in the warehouse on easier terms
by the Financial Technologies India improves holding capacity and can
Ltd (FTIL) and National Agricultural actually incentivise farm production and
Cooperative Marketing Federation of hence reduce rural poverty.
India Limited (NAFED). After the FTIL (vi) Since the trades are guaranteed (by the
was found involved in irregularities, the exchange), counter party risk is avoided.
FMC (Forward Market Commission), by
end-March 2014 asked it to exit the spot rAising cAPitAl in the PrimAry mArket
exchange.
There are three ways in which a company raises
(ii) NCDEX Spot Exchange Ltd (established capital in the primary market.
in October 2006 by NSE).
(iii) Reliance Spot Exchange Ltd. (R-Next). Public Issue
(iv) Indian Bullion Spot Exchange Ltd. (an A public offer is open for all Indian citizens, the
online over the counter spot exchange). most broad-based method of raising capital and
the most prestigious, too (the Reliance Industries
ADvAntAges of sPot exchAnges Ltd. is the biggest company of India in this
Spot exchange provides various advantages over category).
the traditional way of trading in commodities:
Rights Issue
(i) Efficient price determination as price is
determined by a wider cross-section of Raising capital from the existing shareholders of a
people from across the country, unlike the company, it means it is a preferential kind of issue
traditional ‘mandis’ where price discovery restricted to a certain category of the public only.
for commodities used to happen only
through local participation. Private Placement
(ii) Ensures transparency in price discovery— Raising capital by selling shares to a select group
anonymity ensures convergence of of investors, usually financial institutions (FIs) but