Competition In Commodities Trading Mkt Will Foster Innovation

Nirmalendu Jajodia, CTO, NCDEX, talks about the impact of the increasing number players vying for space in the commodity exchange market and how NCDEX is gearing up for the competition.

With stock exchanges like the NSE and BSE vying for their space in the market, how is NCDEX gearing up to meet the competition?

It is true, that there is plenty of interest in this space and we will see more stock exchanges wanting to claim their share. As of now, we believe that we have only touched the surface. There is a large segment of products, players, instruments and geographies, that have not been brought under the ambit of active futures trading.

There is evidently scope for us to go deeper into each of these areas and cover them with the support of appropriate regulatory action. Farmers, corporates Bodies etc. are largely out of the spectrum of hedgers while individuals have a very hazy view of investing in this market compared to the equity market. There are no Commodity based mutual funds (except gold ETFs), limiting retail participation further. Today trade is concentrated in a set of not more than 20 products and there is need to bring in liquidity in more products through value chain. Further, there are regional biases to commodity trading which can be bridged through more awareness and accessibility. Therefore, we do see competition positively in this field as it will help us gear up with innovative products and strategies, to increase the circumference of our trading community - which includes products, players and regions.

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How will NCDEX continue trading operations in spite of the Sun Outage challenge? What is the alternate arrangement?

NCDEX has always had the capability to continue operations during the eclipse of the satellite due to its relative position with respect to the sun (popularly called sun outage). This phenomenon affects only the VSAT segment while the terrestrial networks using leased lines, MPLS circuits or Internet are not affected.

These arrangements have always been in place. Since terrestrial connectivity has improved in the country, we see no reason to suspend trading when VSATs alone are impacted. In this, we are in line with current Exchange practice in the country.

How is NCDEX planning to leverage the mobile channel?

We are studying this channel as of now. Our prices are already available through the mobile channel. The usage of the channel for trading will depend on the interest envisaged by active traders using this channel on a regular basis.

Have you done any POCs on Cloud Computing products? What is your view about this technology?

We have used cloud computing for limited projects to speed up development and testing. We see it as infrastructure being made available at short notice. However, we are unlikely to use it for production due to the lack of clarity about liabilities in case of failures and data accessibility issues.