Crude trading: NCDEX plans to rope in RIL, IOC

The National Commodity and Derivatives Exchange Ltd plans to rope in oil companies like Indian Oil Corporation and Reliance Industries Ltd to boost Brent crude futures trading on the bourse.

"We are in discussions with public sector companies, including IOC and BPCL, as also with private firms like Reliance and Essar for crude futures trading," a senior NCDEX official said.

The official said so far no big oil company has joined the bourse as broking and clearing member. Participation of these companies was essential to increase trading volumes on the bourse, he said.

In volume terms, Brent crude trading currently ranges between 30,000 barrels per day to 50,000 bpd, while turnover is in the range of Rs 15 (Rs 150 million) to 18 crore (Rs 180 million), he said. However, almost the entire volume is speculative trading, he said.

NCDEX has tied up with US-based InterContinental Exchange Futures and offers trading in rupee terms. Its rival Multi Commodity Exchange has tied up with NYMEX for crude futures trading.

The official said both NCDEX and MCX faced similar set of problems -- absence of big oil firms and added that volumes are unlikely to rise significantly unless big companies enter the commodity markets.

The official said presence of oil firms would broaden the scope of crude futures and give the much-needed liquidity boost to energy market in the country. 

The move would also help Indian oil companies hedge their risk in domestic crude since trading is done in rupee terms and not in dollars, the official said. Domestic oil companies such as RIL were already hedging part of their risk in international markets, he added.

Besides crude futures, NCDEX plans to start natural gas futures in association with state-run Gail India Ltd. The MoU with Gail envisages developing a spot market for natural gas, he said, adding that the spot platform was expected to be developed within two months. If that happens, NCDEX would be the first exchange in Asia to begin natural gas trading.

The commodity bourse has also tied up with MetalJunction to prepare a coal index before starting coal futures in the country, the official said.

MetalJunction, a joint venture between Steel Authority of India Ltd and Tata Steel, is a platform for auction of metals and minerals.

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