India’s two leading commodity exchanges are pitted against one another to be part of the government’s sovereign gold bond scheme, the final guidelines for which are still awaited.
The government’s draft guidelines released last month say that the gold bonds would be benchmarked to gold prices taken from National Commodity and Derivatives Exchange Ltd (NCDEX), the London Bullion Market Association (LBMA) or the Reserve Bank of India (RBI) and the rupee equivalent amount may be converted at the RBI reference rate on issue and redemption.
This has not gone down well with Multi Commodity Exchange of India Ltd (MCX), the larger rival of NCDEX, which is trying to convince the government that prices should be benchmarked to contracts traded on MCX.
Gold is among the top traded commodities on MCX, whereas for NCDEX, the bulk of its turnover comes from agricultural commodities. As per data from the commodities market regulator Forward Markets Commission (FMC), for the fortnight ended 31 May, gold contracts worth Rs.39,674.61 crore were traded on MCX. The FMC fortnightly bulletin did not include NCDEX’s gold trading data as it did not feature among the top 10 traded commodities on the exchange.