PREFACE

Since last two decades, the globalization brought in to the Indian economy by, progressive policies of the government of India. Today the company’s management play an important and remarkable role for the advancement and expanding of industrial development, it also fulfill the competitive aspect and also give world class product and required service, Business administration is now emerging for all the function of management higher financial and distributive targets. Management has today gained an applauding fame worldwide. Today corporate world is facing many complexities; there is a management, which is the watchdog for the financial areas of any company.

Being a student of Third year B.B.A., we must prepare a project report for analytical purpose as per Gujarat University’s Criteria. The University gives us the best opportunity so that we can acquire the knowledge in the world of practical management, it is very interesting task to prepare a group report but not so easy. Therefore, in the context of these criteria we have studied the launch market for WORKING OF NATIONAL MULTI COMMODITY EXCHANGE OF INDIA LTD. One of the fast growing commodity exchanges in India. The purpose behind this report is to know the market practically, which differs from theoretical part.

The report contains a number of features that we believe favorable distinguish them. Especially, we wish to mention that we have tried to keep language simple and straight and presentation of the entire matter as evidenced by classification of topics in the parts and section are attempt has been made throughout the report to classify various business and pre launch market research with the help of collective information.

ACKNOWLEDGEMENT First, we are thankful to GOD for giving us the ability and inspiration for taking us this project task with sincerity and dedication. We wish to express our heartful appreciation who has contributed to this project.

Special words of thanks to Mrs.S.N.Trivedi, Director of B.W.T.I.B.A.We are heartily thankful to the staff of NMCE especially to for cooperating us in all the ways.

Finally, We would also like to express our deep sense of gratitude to prof. Dharmesh Shah & Prof. Pallavi Oza ,an example of teaching excellence who had a perform influence on our way and for providing necessary help in the course of completing this project.

Bhavesh G. vora Chirag B. Patel Girish G. Sheladia Kalpesh D. Prajapati Ankit S.Kanani Kamal V.Dhebaria

Place: Ahmedabad.

CERTIFICATE

INTRODUCTION TO GROUP MEMBERS

NAMES ROLL NO.

1. VORA BHAVESH G.(T.Y.B.B.A) 30982. PATEL CHIRAG B. (T.Y.B.B.A) 30503. SHELADIYA GIRISH G. (T.Y.B.B.A) 30864. PRAJAPATI KALPESH D. (T.Y.B.B.A) 30655. DHEBARIA KAMAL V. (T.Y.B.B.A) 30176. KANANI ANKIT S. (T.Y.B.B.A) 3027

OBJECTIVE OF MAKING THIS REPORT

As we are students of T.Y.B.B.A., we have to prepare report as per university criteria. We have prepared this report with some motives.Nowadays only theoretical knowledge is not sufficient to survive in this competitive environment era. So that we have select NATIONAL MULTY COMMODITY EXCHAGE LTD. As our company. Our some objectives to prepare this report are as follows:-

1. As per our university rule we have prepared this report.2. To expand our practical knowledge we have prepare report of

NMCE.3. To work in a group is great experience. So that we have work in a

group to make this report.4. To get good knowledge of transaction in commodity exchange we

have choose this company.5. For our future we need some understanding of big companies. We

have prepared.

DIFFERENCES BETWEEN STOCK & COMMODITY

EXCHANGE

Now a day’s one can find that there is quite similarities in the meaning of stock exchange &commodity exchange. Most of public believe that there is no different between stock exchange commodity exchange. However, in a basic sense there are huge differences between the meanings of both the term. One can classify the differences as follows:

Stock exchange means any place where the shares, bonds, and debentures are traded. It means that the stock exchange helps in dealing, issue and transactions of shares.

Commodity exchange means that any place where the commodities are traded. It means that they are helping in dealing of, issue of commodities are going on.

Stock exchange is related the trading of the security like equity shares, preference shares, debentures, bonds , government securities, mutual fund etc. where in commodity exchange we find that dealing of commodity like cotton, gold, silver etc. are traded.

Stock exchange is blessing for speculators to earn money & get capital for the company. it is the vast medium of capital, where in commodity exchange is blessing for farmers, commodity traders, manufacturers etc.Commodity exchange is playing the pivotal role in our country, as India is agriculture country.

There is high risk for investors in stock market as the price of shares are fluctuated at the most rates & day by day in commodity exchange risk is very low compare to stock exchange.People are most interested in stock exchange compare to that commodity exchange is new concept as it is more than 100 years old concept.

Stock exchange is just 4 years old concept where as commodity exchange is 100 years old concept.

Sotck exchange is not related to common people life. Where commodity exchange is related to common men life.

In transaction of stock exchange there is not tax provision where compare to that in commodity exchange sales tax, demurrage etc. taxes are there.

In India there are 24 stock exchange in different cities and states, where as commodity exchange are only three in India.

In the stock exchange there is no need of stored securities where as in the commodity exchange transaction commodities are needed to be stored. So that warehouses are basic need for commodity exchange.

In the security exchange does not provide any kind of connectivity to their members where as commodity exchange provide V-SAT kind of computerized commodity.

BRIEF HISTORY OF STOCK EXCHANGE

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started its trading under a tree (now known as 68 Wall Street) over 200 years ago?

Similarly, India's premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to as far as 125 years when it started as a voluntary non-profit making association.

News on the stock market appears in different media every day. You hear about it any time it reaches a new high or a new low, and you hear about it daily in statements like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks and stock markets are important. Stocks of public limited companies are bought and sold at a stock exchange. However, what really are stock exchanges? Known also as the stock market or bourse, a stock exchange is an organized marketplace for securities (like stocks, bonds, options) featured by the centralization of supply and demand for the transaction of orders by member brokers, for institutional and individual investors. The exchange makes buying and selling easy. For example, you don't have to actually go to a stock exchange, say, BSE - you can contact a broker, who does business with the BSE, and he or she will buy or sell your stock on your behalf.

All stock exchanges perform similar functions with respect to the listing, trading, and clearing of securities, differing only in their administrative machinery for handling these functions. Most stock exchanges are auction markets, in which prices are determined by competitive bidding. Trading may occur on a continuous auction basis, may involve brokers buying from and selling to dealers in certain types of stock, or it may be conducted through specialists dealing in a particular stock.

However, where did it all start? The need for stock exchanges developed out of early trading activities in agricultural and other commodities. During the middle Ages, traders found it easier to use credit that required supporting documentation of drafts, notes, and bills of exchange. The history of the earliest stock exchange, the French stock exchange, may be traced back to 12th century when transactions occurred in commercial bills of exchange. To control this budding market, Phillip, the Fair, of France (1268-1314) created the profession of couratier de change, which was the predecessor of the French stockbroker. At about the same time, in

Bruges (a prosperous centre of the low countries of Europe), merchants began gathering in front of the house of the Van Der Buerse family to engage in trading. Soon the name of the family became identified with trading and in time, a 'bourse' came to signify a stock exchange. At the same time, stock exchanges began to materialize in other trading centre like the Netherlands (Amsterdam Bourse), Frankfurt (the Deutsche Stock Exchange, formerly the Börse) the London Stock Exchange (LSE) in England and Milan (the Borsa).

In 1773, London stock dealers, who had been meeting informally in coffee houses, moved into their own building to establish an exchange (see history: London Stock Exchange). Other European exchanges that opened in the 1600s and 1700s included those in Belgium, Spain, Portugal, and Sweden. From the early exchanges for commercial bills and notes, it was an easy and logical transition to establish stock exchanges for securities. Amsterdam's Bourse was the first to formally begin trading in securities.

Across the Atlantic, in the United States, securities markets began speculative trading in issues of the new government. By 1791, the nation's first stock exchange was established in the city of Philadelphia. A year later, in 1792, an exchange was set up in New York City by 24 merchants and brokers, who decided to act as agents for other persons and give preference to each other in their negotiations. They did much of their trading under a tree at what is now 68 Wall Street. That stock exchange grew as the nation became industrialized and by 1863, the New York Stock Exchange (NYSE) adopted its present name (see history: New York Stock Exchange). Today, nearly three thousand companies from all over the world trade their stocks valued at trillions of dollars here.

At that time, many stocks that were deemed not well enough for the NYSE were traded outside on the curbs. This so called 'curb trading' has now become the American Stock Exchange (AMEX) (see history: AMEX) . Today, the NYSE and AMEX have been joined by the NASDAQ and hundreds of local and international stock exchanges. By the mid-1800s, many countries outside of Europe (including Canada and Australia) began trading in securities. During the 19th and 20th centuries, major exchanges opened in Asia, Eastern Europe, and parts of Africa and Latin America.

The stock trading history in India is obscured in the mists of time. Historical records, as and where they exist, rarely speak about business

and speculative activity except in passing. However, the origin of stock broking in the country may go back to a time, when shares, debentures, and bonds representing titles to property were first issued on the condition of transfer from one person to another and the earliest record of dealings in securities in India is the East India Company's loan securities, back in the 18th century.

The first stock exchange in India, Bombay Stock Exchange was established in 1875 as 'The Native Share and Stockbrokers Association' and has evolved over the years into its present status as the premier stock exchange in the country. It may be noted that BSE is the oldest stock exchange in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The country's second stock exchange was established in Ahmedabad in 1894, followed by the Calcutta Stock Exchange (CSE). CSE can also trace its origin back to 19th century. From a get together under a 'neem tree' way back in the 1830s, the CSE was formally established in May 1908.

India's other major stock exchange National Stock Exchange (NSE), promoted by leading financial institutions, was established in April 1993. Over the years, several stock exchanges have been established in the major cities of India. There are now 23 recognised stock exchanges — Mumbai (BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmedabad, Bangalore, Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi, Kanpur, Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara, Indore and Meerut. Today, most of the global stock exchanges have become highly efficient, computerised organisations. Computerised networks also made it possible to connect to each other and have fostered the growth of an open, global securities market.

INTRODUCTION TO BSE

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in securities, debt, and derivatives upholds the interests of the Investors and ensures redressal of their grievances whether against the Companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmes and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange and he is assisted by the Chief Operating Officer and other Heads of Departments. The Exchange has inserted new Rule No.126 A in its Rules, Bye-laws & Regulations pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three SEBI nominees, or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of member-brokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the member-brokers to the Exchange, etc. Turnover on the Exchange The average daily turnover of the Exchange during the financial year 2000-2001 (April-

March), was Rs.3984.19 crores and the average number of daily trades was 5.69 lakhs. The average daily turnover of the Exchange in the subsequent two financial years, i.e., 2001-02 & 2002-03, has declined considerably to Rs. 1248.15 crores and Rs. 1251.29 crores respectively. The average number of daily trades recorded during 2001-02 and 2002-03 numbered 5.17 lakhs and 5.63 lakhs respectively.The average daily turnover and average number of daily trades during the quarter April-June 2003 were Rs. 1101.05 crores and 5.70 lakhs respectively.

The ban on all deferral products like Borrowing & Lending of Securities Scheme (BLESS) and Automated Lending & Borrowing Mechanism (ALBM) in the Indian capital markets by SEBI w.e.f. July 2, 2001, abolition of account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded on the Exchanges w.e.f. December 31, 2001, etc. have adversely impacted the liquidity in the market and consequently there is a considerable decline in the average daily turnover at the Exchange as reflected in above statistics.

Investors or customers protection fund(IPF)

In accordance with the guidelines issued by the Ministry of Finance, Government of India, the Exchange has set up an Investor Protection Fund (IPF) on July 10, 1987 to meet the claims of investors against defaulter members.

The Fund is managed by the trustees appointed by the Exchange.

The members at present contribute to this Fund Re.0.15 per Rs.1 lakh of gross turnover, which is debited to their general charges account. The Stock Exchange contributes on a quarterly basis 2.5% of the listing fees collected by it. In addition, the entire interest earned by the Exchange on 1% security deposit kept with it by the companies making public/rights issues is credited to the Fund. As per the SEBI directive, auction proceeds in certain cases, where price manipulation / rigging were suspected, have been impounded and transferred to the Fund. In addition, the surplus lying in the account of the defaulters after meeting their liabilities on the Exchange is released to them after transferring 5% of the surplus amount to this Fund.

As at the end of June 30, 2002, the corpus of the Fund was Rs 157.03 crores.

The maximum amount presently payable to an investor from this Fund in the event of default by a member is Rs.10.00 lakhs. This has been progressively raised by the Exchange from Rs.5,000/- in 1988 to the present level and is the highest among the Stock Exchanges in the country.

The arbitration awards obtained by investors against defaulters are scrutinized by the Defaulters Committee, a Standing Committee constituted by the Exchange, to ascertain their genuineness, etc. Once the Defaulter Committee is satisfied about genuineness of the claim, it recommends to the Trustees of the Fund for release of the award amount or Rs.10.00 lacs, whichever is lower? After the approval of the Trustees of the Fund, the amount is disbursed to the clients of the defaulters from the Investor Protection Fund.

SAFETY OF THE MARKET One of the objectives of the Exchange is to promote and inculcate honorable and just practices of trade in securities transactions and to discourage malpractices.

The surveillance function at the Exchange has assumed greater importance in the last five years. The Securities and Exchange Board of India (SEBI) had directed the Stock Exchanges in August 1995 to set up a separate Surveillance Department with staff exclusively assigned to surveillance functions. The Exchange has accordingly set up a separate Surveillance Department to keep a close watch on price movement of scrips, detect market manipulations like price rigging, etc., monitor abnormal prices and volumes which are not consistent with normal trading pattern and monitor the member-brokers’ position to ensure that defaults do not occur. This Department, which is headed by a General Manager, reports directly to the Executive Director.

The Surveillance Department monitors exposure of the members on a daily basis . It also scrutinises the prices and volumes of the scrip’s on a daily basis.

As per the guidelines issued by SEBI, the Exchanges are required to apply daily Circuit Filter of 8% on scrip’s quoting above Rs. 20. However, in respect of scrips quoting below Rs. 20, the Exchanges are free to set their own circuit filters. The Exchange has accordingly prescribed 8% circuit filters for scrips quoting above Rs. 10/- but below Rs. 20, and for scrips quoting upto Rs. 10/-, daily and weekly circuit filters are 25% and 50% respectively. As directed by SEBI, the circuit filter limit in 200 scrips, which are commonly traded and jointly identified by BSE and NSE and scrips which are under the Compulsory Rolling Settlement, has been relaxed to 16% with effect from July 3, 2000. In this connection, it has been decided that if a scrip touches 8% circuit filter band in either direction, the circuit filter would be relaxed by another 8% in that same direction. There is a cooling off period of half an hour before the circuit filter is relaxed. The circuit filter for a scrip is relaxed only once in each direction in a day. In case the circuit filter in a scrip is hit in last half an hour of trading, the circuit filter in the scrips is relaxed after cooling period of 15 minutes instead of half an hour. The imposition of circuit filters on scrips ensures that the price of scrip cannot move upward or downward beyond the limit set for a day and a settlement.

The large variation in the prices as well as the volumes of the scrips are scrutinised and appropriate actions are taken. The scrips that reach new high or new low and companies, which have high turnover, are watched. Also the prices and volumes in the newly listed scrips are monitored. In case certain abnormalities are noticed, then circuit filters are reduced to make it difficult for the price manipulators to increase or push down the prices of a scrip within a short period of time. The Exchange imposes special margin in the scrips where it is suspected that there is an attempt to ramp up the prices by creating artificial volumes. In cases where the abnormal movements continue despite the previously mentioned measures, trading in the scrip is suspended.

Detailed investigations are conducted in cases where price manipulation is suspected and disciplinary action is taken against the members concerned, if warranted. Where any scrip has been suspended for more than three days, a detailed investigation report is prepared and sent to SEBI for further investigation/action, if any.

The Exchange has developed an On-line Real Time (OLRT) Surveillance System, which has been commissioned from July 15, 1999. Under this system, alerts are generated by the system on-line, in real time, based on certain preset parameters like the price and volume variation in scrips, members taking unduly large positions not commensurate with their financial position or having concentrated position(s) in one or a few scrips, etc.

This system includes databases such as company profile, members’ profile, and historical database of turnover and price movement in scrips, members’ turnover, their pay-in obligations, etc. The system generates alerts based on pre-set parameters during the trading hours and corrective action based on further investigations is taken in such cases.

LISTING OF SECURITIES

Listing means admission of the securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi-governmental and other financial institutions/corporations, municipalities, etc.The objectives of listing are mainly to: provide liquidity to securities; mobilize savings for economic development; protect interest of investors by ensuring full disclosures. The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Byelaws and Regulations of the Exchange.

A company intending to have its securities listed on the Exchange has to comply with the listing requirements prescribed by the Exchange. Some of the requirements are as under :-I. Minimum Listing Requirements for new companiesII. Minimum Listing Requirements for companies listed on other stock exchangesIII. Minimum Requirements for companies delisted by this Exchange seeking relisting of this ExchangeIV. Permission to use the name of the Exchange in an Issuer Company's prospectusV. Submission of Letter of ApplicationVI. Allotment of SecuritiesVII.Trading PermissionVIII. Requirement of 1% SecurityIX. Payment of Listing FeesX. Compliance with Listing AgreementXI. "Z" GroupXII. Cash Management Services (CMS) - Collection of Listing Fees

[I] Minimum Listing Requirements for new companies (A) Minimum Capital : New companies can be listed on the Exchange, if their issued & Subscribed equity capital after the public issue is Rs.10 crores . In addition to this the issuer company should have a post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 crores.

For new companies in high technology ( i.e. information technology, internet, e-commerce, telecommunication, media including advertisement, entertainment etc.) the following criteria will be applicable regarding threshold limit:

The total income/sales from the main activity, which should be in the field of information technology, internet, e-commerce telecommunication, media including advertisement, entertainment etc. should not be less than 75% of the total income during the two immediately preceding years as certified by the Auditors of the company.

The minimum post-issue paid-up equity capital should be Rs.5 Crores.The minimum market capitalisation should be Rs.50 Crores. (The capitalisation will be calculated by multiplying the post issue subscribed number of equity shares with the Issue price).Post issue networth ( equity capital + free reserves excluding revaluation reserve) of Rs.20 Crores.

(B) Minimum Public offer : As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of a company can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered to the public for subscription.In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the securities issued by the company may be offered to the public subject to the following:

Minimum 20 lac securities are offered to the public (excluding reservation, firm allotment and promoters contribution) The size of the offer to the public is minimum 50 crores. For this purpose, the term "offered to the public" means only the portion offered to the public and does not include reservations of securities on firm or competitive basis.SEBI may, however, relax this condition on the basis ofrecommendations of stock exchange(s), only in respect of a Government company defined under Section 617 of the Companies Act, 1956.Top

[II] Minimum Listing Requirements for companies listed on other stock exchanges: The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect. The company should have minimum issued and paid up equity capital of Rs. 3 crores. The Company should have profit making track record for last three years. The revenues/profits

arising out of extra ordinary items or income from any source of non-recurring nature should be excluded while calculating distributable profits. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). Minimum market capitalisation of the listed capital should be at leas two times of the paid up capital. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians. The company should have at least two years listing record with any of the Regional Stock Exchange. The company should sign an agreement with CDSL & NSDL for demat trading.

[III] Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange The companies delisted by this Exchange and seeking relisting are required to make a fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings. [IV] Permission to use the name of the Exchange in an Issuer Company's prospectus: The Exchange follows a procedure in terms of which companies desiring to list their securities offered through public issues are required to obtain its prior permission to use the name of the Exchange in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analyse draft prospectus/offer documents of the companies in respect of their forthcoming public issues of securities and decide upon the matter of granting them permission to use the name of "The Stock Exchange, Mumbai" in their prospectus/offer documents. The committee evaluates the promoters, company, project and several other factors before taking decision in this regard. [V] Submission of Letter of Application As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies.

[VI] Allotment of Securities: As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment.In case of Book Building issue, Allotment shall be made not later than 15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to the investors.

[VII] Trading Permission : As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days of finalisation of Basis of Allotment.A company should scrupulously adhere to the time limit for allotment of all securities and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of all the Exchanges whose names are stated in its prospectus or offer documents. In the event of listing permission to a company being denied by any Stock Exchange where it had applied for listing of its securities, it cannot proceed with the allotment of shares. However, the company may file an appeal before the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.

[VIII] Requirement of 1% Security :The companies making public/rights issues are required to deposit 1% of issue amount with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc.

[IX] Payment of Listing Fees : All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time.The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board of the Exchange and approved by the Securities and Exchange Board of India is given hereunder :

SCHEDULE OF LISTING FEES FOR THE YEAR 2004-2005

Sr. No. ParticularsAmount (Rs.) 1Initial Listing Fees20,000 2Annual Listing Fees

(i) Companies with paid-up capital* upto Rs. 5 crores

(ii) AboveRs. 5 crores and upto Rs. 10 crores

(iii) Above Rs. 10 crores and upto Rs. 20 crores

Companies which have a paid-up capital* of more than Rs. 20 crores will pay additional fee of Rs. 750/- for every increase of Rs. 1 crores or part thereof. In case of debenture capital (not convertible into equity shares) ofcompanies, the fees will be charged @ 25% of the fees payable as per the above mentioned scales. *includes equity shares, preference shares, fully convertible debentures, partly convertible debenture capital and any other security which will be converted into equity shares.Kindly Note the last date for payment of listing fee for the year 2004-05 is June 30, 2004

[X] Compliance with Listing Agreement : The companies desirous of getting their securities listed are required to enter into an agreement with the Exchange called the Listing Agreement and they are required to make certain disclosures and perform certain acts. As such, the agreement is of great importance and is executed under the common seal of a company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilities for prompt transfer, registration, sub-division and consolidation of securities; to give proper notice of closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely to materially affect the financial performance of the Company and its stock prices, to comply with the conditions of Corporate Governance, etc.The Listing Department of the Exchange monitors the compliance of the companies with the provisions of the Listing Agreement, especially with regard to timely payment of annual listing fees, submission of quarterly results, requirement of minimum number of shareholders, etc. and takes penal action against the defaulting companies.

[XI] "Z" Group : The Exchange has introduced a new category called "Z Group" from July 1999 for companies who have not complied with and are in breach of provisions of the Listing Agreement. The number of companies placed under this group as at the end of May, 2001 was 1,475.The number of companies listed at the Exchange as at the end of

May 2001 was 5,874. This is the highest number among the Stock Exchanges in the country and in the world. New Direct Listing norms The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect.The company should have minimum issued and paid up equity capital of Rs. 3 crores. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of non-recurring nature should be excluded while calculating distributable profits. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). Minimum market capitalisation of the listed capital should be at least two times of the paid up capital. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians. The company should have at least two years listing record with any of the Regional Stock Exchange. The company should sign an agreement with CDSL & NSDL for demat trading.

[XII] Cash Management Services (CMS) - Collection of Listing FeesAs a further step towards simplifying the system of payment of listing fees, the Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations, situated all over India.Details of the HDFC Bank branches, are available on our website site www.bseindia.com as well as on the HDFC Bank website www.hdfcbank.com The above facility is being provided free of cost to the Companies. Companies intending to utilise the above facility for payment of listing fee would be required to furnish the information, (mentioned below) in the Cash Management Cash Deposit Slip. These slips would be available at all the HDFC Bank centres. S.No HEADINFORMATION TO BE PROVIDED

1. Client NameThe Stock Exchange, Mumbai 2. Client CodeBSELIST 3. Cheque No.mention the cheque No & date

4. Datedate on which payment is being deposited with the bank. 5. Drawerstate the name of the company and the company code No.Thelast digits mentioned in the Ref. No. on the Bill is the company code No.e.g If the Ref. No in the Bill is mentioned as : Listing/Alf-Bill/2004-2005/4488, then the code No of that company is 4488 6. Drawee Bankstate the bank on which cheque is drawn7. Drawn on LocationMention the location of the drawee bank.8. Pickup LocationNot applicable9. No. of InstsNot applicable

The Cheque should be drawn in favour of The Stock Exchange, Mumbai, and should be payable, locally.Companies are requested to mention in the deposit slip, the financial year(s) for which listing fee is being paid. Payment made through any other slips would not be considered. The above slips will have to be filled in quadruplicate. One acknowledged copy would be provided to the depositor by the HDFC Bank. In case Companies require any further clarifications please contact Shri Sydney Miranda on 022-22723158 or Shri Rajesh Ghadi on Tel No 022- 22721233 ext. No. 8158.

BACKGROUND OF COMPANY

First state-of-the art National Multi Commodity Exchange set up by Public Institutions: NMCE

In response to the Press Note issued by the Government of India on 8th March 2002, first state-of-the-art demutualised multi-commodity Exchange, National Multi Commodity Exchange of India Ltd. (NMCE) was promoted by commodity-relevant public institutions, viz., Central Warehousing Corporation (CWC), National Agricultural Cooperative Marketing Federation of India (NAFED), Gujarat Agro-Industries Corporation Limited (GAICL), Gujarat State Agricultural Marketing Board (GSAMB), National Institute of Agricultural Marketing (NIAM), and Neptune Overseas Limited (NOL). While various integral aspects of commodity economy, viz., warehousing, cooperatives, private and public sector marketing of agricultural commodities, research and training were adequately addressed in structuring the Exchange, finance was still a vital missing link. Punjab National Bank (PNB) took equity of the Exchange to establish that linkage. Even today, NMCE is the only Exchange in India to have such investment and technical support from the commodity relevant institutions. These institutions are represented on the Board of Directors of the Exchange and on various committees set up by the Exchange to ensure good corporate governance. Some of them have also lent their personnel to provide technical support to the Exchange management. The experienced and qualified professionals with impeccable integrity and expertise manage the day-to-day operations of the Exchange. None of them has any trading interest. The structure of NMCE is impossible to replicate in India.

NMCE is unique in many other respects. It is a zero-debt company; following widely accepted prudent accounting and auditing practices. It has robust delivery mechanism making it the most suitable for the participants in the physical commodity markets. The exchange does not compromise on its delivery provisions to attract speculative volume. Public interest rather than commercial interest guide the functioning of the Exchange. It has also established fair and transparent rule-based procedures and demonstrated total commitment towards eliminating any

conflicts of interest. It is the only Commodity Exchange in the world to have received ISO 9001:2000 certification from British Standard Institutions (BSI).

NMCE commenced futures trading in 24 commodities on 26th November, 2002 on a national scale and the basket of commodities has grown substantially since then to include cash crops, food grains, plantations, spices, oil seeds, metals & bullion among others. Research Desk of NMCE is constantly in the process of identifying the hedging needs of the commodity economy and the basket of products is likely to grow even further. NMCE has also made immense contribution in raising awareness about and catalyzing implementation of policy reforms in the commodity sector. NMCE was the first Exchange to take up the issue of differential treatment of speculative loss. It was also the first Exchange to enroll participation of high net-worth corporate securities brokers in commodity derivatives market. It was the Exchange, which showed a way to introduce warehouse receipt system within existing legal and regulatory framework. It was the first Exchange to complete the contractual groundwork for dematerialization of the warehouse receipts. Innovation is the way of life at NMCE.

Evolution

Evolution of Commodity Derivatives Markets in India.

The Indian experience in commodity futures market dates back to thousands of years. References to such markets in India appear in Kautialya’s ‘Arthasastra’. The words, “Teji”, “Mandi”, “Gali”, and “Phatak” have been commonly heard in Indian markets for centuries.The first organized futures market was however established in 1875 under the aegis of the Bombay Cotton Trade Association to trade in cotton contracts. Derivatives trading were then spread to oilseeds, jute, and food grains. The derivatives trading in India however did not have uninterrupted legal approval. By the Second World War, i.e., between the 1920’s &1940’s, futures trading in organized form had commenced in a number of commodities such as – cotton, groundnut, groundnut oil, raw jute, jute goods, castor seed, wheat, rice, sugar, precious metals like gold and silver. During the Second World War futures, trading was prohibited under Defence of India Rules.After independence, the subject of futures trading was placed in the Union list, and Forward Contracts (Regulation) Act, 1952 was enacted. Futures trading in commodities particularly, cotton, oilseeds and bullion, was at its peak during this period. However, following the scarcity in various commodities, futures trading in most commodities was prohibited in mid-sixties. There was a time when trading was permitted only two minor commodities, viz., pepper and turmeric.Deregulation and liberalization following the forex crisis in early 1990s, also triggered policy changes leading to re-introduction of futures trading in commodities in India. The growing realization of imminent globalization under the WTO regime and non-sustainability of the Government support to commodity sector led the Government to explore the alternative of market-based mechanism, viz., futures markets, to   protect the commodity sector from price-volatility. In April 1999, the Government took a landmark decision to remove all the commodities from the restrictive list. Food-grains, pulses, and bullion were not exceptions.The long spell of prohibition had stunted growth and modernization of the surviving traditional commodity exchanges. Therefore, along with liberalization of commodity futures, the Government initiated steps to

cajole and incentives the existing Exchanges to modernize their systems and structures. Faced with the grudging reluctance to modernize and slow pace of introduction of fair and transparent structures by the existing Exchanges, Government allowed setting up of new modern, demutualised Nation-wide Multi-commodity Exchanges with investment support by public and private institutions. National Multi Commodity Exchange of India Ltd. (NMCE) was the first such exchange to be granted permanent recognition by the Government.

MAP OF STOCK EXCHANGES

A CLOSE LOOK AT NMCE

NMCE facilitates electronic derivatives trading through robust and tested trading platform, Derivative Trading Settlement System (DTSS), provided by CMC.

When an order is placed on the exchange, the server at NMCE scans through the orders posted on it from all its trading terminals. It then locates and matches the best counter-offers/bids by maintaining anonymity of the counter-parties. Anonymity helps is eliminating formation of cartels and other unfair practices, thereby protecting the efficiency of price-discovery at the Exchange. NMCE was the first commodity exchange to provide trading facility through internet, through Virtual Private Network (VPN).

NMCE follows best international risk management practices. The contracts are marked to market on daily basis. The system of upfront margining based on Value at Risk is followed to ensure financial security of the market. In the event of high volatility in the prices, special intra-day clearing. Settlement is held. NMCE has also set up a Trade Guarantee Fund. Well-capitalized in house clearinghouse assumes counter-party risk of settlement. NMCE was the first to initiate process of dematerialization and electronic transfer of warehoused commodity stocks. The unique strength of NMCE is its settlements via a Delivery Backed System, an imperative in the commodity trading business. These deliveries are executed through a sound and reliable Warehouse Receipt System, leading to guaranteed clearing and settlement.

Delivery Mechanism

One of the methods of settling the contracts is by taking or making delivery. Delivery period at NMCE is 10th to 15th of the delivery month. During this period, Members of the exchange are not permitted to create any fresh position in the expiring contracts. They can either square up their position or take/give delivery to settle their outstanding contracts. Various steps required to be followed by the participants having outstanding position on 10th of delivery month are as follows:

1)Sellers and buyers have to convey intention on or before 10th of the delivery month

2)

The intentions are then matched and assigned by the Exchange with the corresponding buyers. As is the case universally, seller has freedom to tender delivery during the delivery period at any approved delivery centers. In other words, buyer cannot demand delivery at delivery center of his choice. When the seller gives intimation, a call is made to the corresponding buyer to whom the delivery is assigned by the Exchange. Delivery margin is collected from both the buyer and seller

3)

After matching the open positions of relevant buyer and seller, the same is transferred from the system and settled at the closing price of the preceding day, so that mark to market (MTM) is not levied or paid to the member

4)

Within three days from the position transfer, the buyer has to maintain the required funds in their clearing & settlement account while the seller has to tender the warehouse receipts to the exchange along with the computation of warehouse charges. On the 3rd day, the exchange makes pay-in & payout simultaneously after retaining the warehouse charges margin and sales tax margin from the buyer and seller respectively

5)After the completion of pay-in and payout, duly endorsed warehouse receipts are sent to the buyer immediately

6)Settlement of warehouse charges, margins, and sales tax margins take place soon after receipt of relevant documents (copies of sales bill, sales tax form) from the member.

Exchange looks over the commodities to be delivered from the open positions of members

Open Long Position è Buyers

Open Short Position è Sellers

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Matching of Open Positions in Between

Buyers & Sellers5 days prior to the end of the contract month.

On T+3 day

Seller has to tender Warehouse Receipt and

make them available to the exchange

The Buyer has to keep the money ready

Pay-in

Pay

-out

è P

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Trans

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Place

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After Completion of Pay-in & Pay-Out process Warehouse Receipts received from the seller are sent to the buyerOn

Delivery day

DELIVERY MECHANISM OF NMCE

 

Eligibility Criteria for Membership

Entities : Following entities are eligible to apply for membership1)Individuals,2)Registered firms,3)Corporate bodies and 4)Companies as defined in the Companies Act 1956.

NetWorth:  Minimum prescribed net worth for an applicant is Rs. 50 lakh. Net worth certificate should be computed for this purpose by following a definition of net worth adopted by practising Chartered Accountants for finalisation of accounts.  Existing fund based asset , if any should be excluded for calculation of net worth.In case, the company is a member of any Commodity  Exchange(s), it should satisfy the combined minimum Net Worth requirements of all these Exchanges including NMCEIL.

Paid-upCapital: Minimum prescribed paid up capital for a corporate is Rs. 30 lakh. In case of  a partnership firm combined capital of all the partners should be at-least Rs.30 lakh.

Fees & Deposits

No.Details

Amount (Rupees in

Lacs)

1 Admission Fees (Non refundable)1.00

2 Contribution towards the Trade Guarantee Fund of the Exchange (Refundable only after the minimum lock in period) *

1.00

3Initial Base Capital (Refundable only after the minimum lock

1.00

in period) *

4 Additional Base Capital (Refundable only after the minimum lock in period) *

10.00

5 Annual Subscription charges 0.20

Total Amount 13.20

* Minimum "Lock in" Period of 3 years.

VSAT ConnectivityTo attain the online connectivity with the Exchange through VSAT members are required to place their orders for the VSAT directly to the HCL Comnet. Following two options are available to the members of the Exchange.

Connectivity Through KU band VSAT :Members can take connectivity through 1.2 M KU Band VSAT. The cost for the same would be Rs. 1,00,000/-(approx), which shall be payable to the HCL Comnet directly.

Connectivity Through Extended C Band VSAT :Members can take connectivity through 1.8 M extended C Band VSAT. The cost for the same would be Rs. 1,44,000/-(approx), which shall be payable to the HCL Comnet directly.However, irrespective of the above two connectivity options. Clearing/Trading Member shall pay bandwidth charges for the VSAT to the Exchange only. The current bandwidth charges are Rs. 2500/- per month per VSAT and Rs. 1,000/- per month for additional terminal on the same VSAT which are being renegotiated with the vendor for downward revision and shall be intimated in due course.

What are futures contracts?

A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future for a certain price. They are normally traded on the exchange. The exchange specifies certain standardized features of the contract. As the two parties do not necessarily know each other, the exchange also provides a mechanism that give the two parties guarantee that the contract will be honored.

What is a "Commodity"?

Commodity includes all kinds of goods. FCRA defines "goods" as "every kind of movable property other than actionable claims, money and securities". Futures' trading is organized in such goods or commodities as are permitted by the Central Government. At present, all goods and products of agricultural (including plantation), mineral and fossil originare allowed for futures trading under the auspices of the commodity exchanges recognized under the FCRA. The national commodityexchanges have been recognized by the Central Government for organizing trading in all permissible commodities which include precious (gold & silver) and non-ferrous metals; cereals and pulses; ginned and un-ginned cotton; oilseeds, oils and oilcakes; raw juteand jute goods; sugar and gur; potatoes and onions; coffee and tea; rubber and spices, etc.

What are Derivatives? The term "Derivative" indicates that it has no independent value, i.e. its value is entirely "derived" from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, livestock, or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre-determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities.

Why do we need a commodity trading exchange? Earlier, all the sellers and buyers of a commodity used to come to a common market place for the trade. Buyer could judge the amount of produce that year while the seller could judge the amount of demand of the commodity. Thus they could dictate their terms and hence the counter party was left with no choice. Thus, in order to hedge from this unfavorable price movement, need of the commodity exchange was felt.

What is a "Commodity Exchange"?

Commodity exchange is an association, or a company or any other body corporate organizing futures trading in commodities.

SALIENT FEATURES AT NMCE

First to get the National status and be fully operational. Demutualised corporate structure leading to a reliable, effective,

impartial and rule based management by professionals having no trade interest.

Convergence of all the offers and bids emanating from all over the country in a single electronic order book of the exchange ensuring equal access to all intermediaries.

Participation of diverse interests like importers, exporters, growers, brokers, traders, etc., using an electronic trading system providing a fair, efficient and transparent commodities market.

Fair trading practice ensured through inbuilt checks and balances in the system.

Use of LEMDA based margining at 99.9% VAR (value at risk) system for the initial margin.

Virtual trading environment using state of the art technology via an advanced communication networking.

First to establish a trade guarantee fund, thereby offering guaranteed clearing and book entry settlements by assuming counter party risks.

Warehouse receipts system for deliveries in graded and standardized commodities meeting international norms ensuring delivery in Demat form

Real Time Price and trade date dissemination Market surveillance program V-SAT based connectivity throughout the country.

In short, NMCE is leading transition of highly fragmented, controlled, and restricted commodity economy to globally integrated, efficient, and competitive environment in the 21st century.

COMMODITIES

  Seeds  Oils Oil Cakes  

1)  Castor Seed 2) Castor Oil 3) Castor Oilcake

4) Copra 5) Coconut Oil 6) Coconut Oilcake

7) Cotton Seed 8) Cotton Seed Oil 9) Cotton Seed Oilcake

10) Groundnut 11) Groundnut Oil 12) Groundnut Oilcake

13)  Linseed 14) Linseed Oil 15) Linseed Oilcake

16) Rape/Mustard Seed

17) Rape/Mustard Seed Oil

18) Rape/Mustard Seed Oilcake

19)  Rape Seed-42

20) Safflower 21) Safflower seed Oil 22) Safflower seed Oilcake

23)  Sesame Seed 24) Sesame seed Oil 25) Sesame Oilcake

26) Soybean 27) Soybean Oil 28) Soybean Oilcake

29) Sunflower seed 30) Sunflower seed Oil 31) Sunflower seed Oilcake

   32) Crude Palm Oil   

   33) RBD Palmolein   

   34) Rice bran Oil   

   35) Vanaspati   

  Metals  Spices Others  

36) Aluminium 45) Pepper 52) Rubber

37) Copper 46) Cardamom 53) Sacking

38) Gold (100 Gms) Pulses 54) Sugar

39) Kilo Gold 47) Gram 55) Gur

40) Lead 48) Tur/Arhar 56) Guarseed

41) Nickel 49) Urad 57) Wheat

42) Silver 50) Moong 58) Rice

43) Tin 51) Masoor 59) Raw Jute 

44) Zinc

BENEFITS OF NMCE

There is a need to move agriculture to a market system of economy from a state owned economy. This requires agriculture to be organized just like the industrial and service sectors of the Indian economy. In addition, flow of corporate and institutional investment in the sector at present is negligible. There is, therefore, the need to facilitate the flow of easy credit to the farmers as a priority, through the use of warehouse receipts to get pledge financing from banks. In a nutshell, there is a need to integrate production, storage, transportation, trading, financing and marketing of agricultural produce in India.

NMCE would bring about the converge of large-scale processors, traders, and farmers along with banks. NMCE would provide a common ground for fixation of future prices of a number of commodities enabling efficient price discovery/forecast. In addition, hedging using different and diverse commodities would also be possible with help of NMCE.

PRICE DISCOVERY

Large ProcessorsFarmers

Banks

Traders

NMCE

Future Price

Better Price Fixation

 

 

 

 

 

 

COMMODITY STUDY

Copra,   Coconut Oil & Coconut Oil cake    Castor Seed, Oil & Oilcake

Cardamom    Groundnut seed, oil & oil cake

Gold Study

Lin Seed

Pepper  Pulses    Rape/Mustard Seed, Oil & Oil cake    Rubber      Safflower seed   Salient features of Oil  

Sesame Seed   Silver Study

     Soy Seed, Oil & Oil cake  Sugar     Sunflower seed

Raw Jute

Wheat

Warehouses

  AHMEDABAD (GUJARAT)  

  BANGLORE (KARNATAKA)  

  BHOPAL (MADHYA PRADESH)  

  BHOPAL (CHHATISGARH)  

  BHUBANESHWAR (ORISSA)  

  CHANDIGARH (PUNJAB)  

  CHANDIGARH (UTI CHANIDGARH)  

  CHANDIGARH (JAMMU & KASHMIR)  

  CHENNAI (TAMILNADU)  

  CHENNAI (PONDICHERRY)  

  DELHI (DELHI)  

  DELHI (UTTAR PRADESH)  

  DELHI (HARYANA)  

  GUWAHATI (ASSAM)  

  GUWAHATI (NAGALAND)  

  GUWAHATI (TRIPURA)  

  HYDERABAD (ANDHRA PRADESH)  

  JAIPUR (RAJASTHAN)  

  KOCHI (KERALA)  

  KOLKATA (WEST BENGAL)  

  LUCKNOW (UTTAR PRADESH)  

  LUCKNOW (UTTARANCHAL)  

  MUMBAI (GOA)  

  MUMBAI (MAHARASHTRA)  

  PANCHKULA (HARYANA)  

  PANCHKULA (HIMACHAL PRADESH)  

  PATNA (BIHAR)  

  PATNA (JHARKHAND)  

Purpose of the Futures Market

Futures market is expected to help the market participants through two vital economic functions, viz., Price Discovery and Price Risk Management. At the macro level, the liquid and vibrant futures market having nationwide participation also assists in sobering down inter-seasonal and intra-seasonal price fluctuations. This not only helps in bringing about reasonable stability in the prices of commodities, but also supports farmers to get remunerative prices without adversely affecting interests of consumers. Such a market also provides a market-based alternative to government involvement like procurement at Minimum Support Price and Public Distribution System.

Price discovery made in spot markets – sometimes also called as cash market -, which are mostly fragmented over-the-counter markets, is inefficient. Price discovery in spot market is affected by geographical dispersion, differential needs of the buyers and sellers in terms of quality, quantity, place of delivery and difficulties associated with handling physical delivery, absence of option to settle the contract by payment of price-difference. In any case, the spot market does not meet the need for price-forecast felt by participants in the physical markets. With convergence of bids and offers emanating from a large number of buyers and sellers from different parts of the country – and possibly from abroad - futures trading is a very efficient means of forecasting the price for a commodity. Convergence of bids and offers in a single order book at NMCE, is facilitated by the DTSS software provided by CMC.

Price Risk Management is very closely related to Hedging, which means transfer of some or all of that risk to those who are willing to accept it, which are in turn called Speculators. Price risk is managed by taking opposite positions on the two legs of the market e.g. spot and futures. The futures prices are linked to the spot prices through carrying cost, which comprises cost of storage, interest, wastage, shrinkage etc. Therefore, the two prices tend to move in parity. Taking opposite positions in the two legs of the market therefore tends to offsets loss in any market because of adverse price fluctuation. All the participants in the physical markets, like, producers, processors, manufacturers, importers, exporters and bulk consumers can focus on their core activities by covering their price-risk in futures market. Their operations become more competitive since the price-risk involved in procurements, supply is transferred to the futures market.

Gold studyFutures trading in Gold in India was carried out till 1962 mainly via Bombay Bullion Association , but as the Gold Control Act came into force this trading was debarred for around 41 long years. On 29th August 2003, National Multi-

Commodity Exchange of India Ltd; got the permission to once again carry out this trend of futures trading in Gold.

We at the exchange would there fore like to take you back to the elapsed history of Gold in India and the present trends of Gold through this document.

For centuries, gold has meant wealth, prestige, and power, and its rarity and natural beauty have made it precious to men and women alike.  Owing gold has long been a safeguard against disaster.  Many times when paper money has failed, men have turned to gold as the one true source of monetary wealth.

Today is no different.  While there have been fluctuations in every market and decided downturns in some, the expectation in that gold will hold its own.  There is a limited amount of gold in the world, so investing in gold is still a good way to plan for the future.

DEMAND & HOLDING PATTERN

The Consumer demand for Gold is more than 3400 tonnes per year making it whopping $40 billion worth. More than 80% of the Gold consumed is in the form of jewellery, which is generally predominated by females. The Indian demand to the tune of 800 tonnes per year is making it the largest market for Gold followed by USA, Middle East and China. About 80% of the Physical Gold is consumed in the form of jewellery while bars and coins occupy not higher than 10% of the Gold consumed. If we include jewellery ownership, then India is the largest repository of gold in terms of total gold within the national boundaries.

Gold Demand and Supply in India

Regarding pattern of demand, there are no authentic estimates, the available evidence shows that about 80% is for jewellery fabrication for domestic demand, and 15% is for investor-demand (which is relatively elastic to Gold-prices, Real Estate prices, Financial Markets, Tax-policies, etc.). Barely 5 % is for industrial uses.

The demand for Gold jewellery is rooted in societal preference for a variety of reasons - religious, ritualistic, a preferred form of wealth for women, and as a hedge against inflation. It will be difficult to prioritize them but it may be reasonable to conclude that it is a combined effect, and to treat any major part as exclusively a store of value or hedging instrument would be unrealistic. It would not be realistic to assume that it

is only the affluent that creates demand for Gold. There is reason to believe that a part of investment demand for Gold assets is out of black money.  Rural India continues to absorb more than 70% of the Gold consumed in India and it has its own role to fuel the barter economy of the Agriculture community.

The yellow metal used to play an important role in marriage and religious festivals in India. In the Hindu, Jain and Sikh community, where women did not inherit landed property whereas Gold and Silver jewellery was, and still is, a major component of the gifts given to a woman at the time of marriage. The changeover hands of Gold at the time of marriage are from few grams to kgs. In the average middle class population, the average gifts estimated would not be less than 100 gms per marriage and even at conservative estimates of 50 grams are met through either new purchases or by re-conversion of existing jewellery, making the Gold market to the whopping size of 500 tonnes on an average ten millions marriage per annum.

The existing social and cultural system continues to cause net Gold buyer market and the Government Policies have to take note of the root cause of Gold demand, which lies in the social and cultural system of India.

The Gold also occupies a significant position in the temple system where Gold is used to prepare idol and devotees offer Gold in the temple. These temples are run in trust and Gold with the trust rarely comes into re-circulation.

PATTERN OF GOLD SUPPLY

Indian Gold holding, which are predominantly private, is estimated to be in the range of 10000-13000 tonnes. One fourth of world Gold production is consumed in India and more than 60% of Indian consumption is met through imports.

The domestic production of the gold is very limited which is around 9 tonnes in 2002 (broken into 2.940 tonnes from mines and Birla Copper 6.203 tonnes) resulting more dependence on the imported Gold. The availability of recycled Gold is price sensitive and as such the dominance of the Gold supply through import is in existence. The fabricated old Gold scraps is price elastic and was estimated to be near 450 tonnes in

2002 rose almost more than 40% compared to the previous year because of rise in gold price by more than 15%.

Quantity and Channel of Imports

The annual consumption of Gold, which was estimated at 65 tonnes in 1982, has increased to more than 700 tonnes in late 90’s. Although it is likely that, with prosperity and enlightenment, there may be deceleration in demand, particularly in urban areas, it would be made good by growing demand on account of prosperity in rural areas. In the near future, therefore, the annual demand will continue to be over 600 tonnes per year.

Estimated Gold Consumer Demand ( tones ) 1996 - 2002 : India and World    1997 1998 1999 2000 2001 2002India 688 775 731 723 727 576WORLD 3770 3451 3511 3343 3413 3068

Price Differences between Local and International market.

The strong domestic demand for Gold and the restrictive policy stance are reflected in the higher price of Gold in the domestic market compared to that in the international market both at official exchange rate and at

"hawala" exchange rate. During the 19-year period from 1977-78 to 1995-96, the average spread between Mumbai and London market prices (Mumbai price less London price in rupee terms) of Gold has been positive, except for a brief period during 1980-81 when the international Gold price zoomed for a brief period following the oil crisis, persistent weakening of dollar resulting in flight of dollar resources into Gold, and accelerating world-wide inflationary trends. The average spread was as high as 41.3 per cent during 1986-91. In the post-liberalization period, with changes in exchange rate regime and some relaxations on import regime of Gold, the average spread between domestic and international prices has come down from 53.1 per cent in 1991 to 20.6 per cent in 1993, 20.1 per cent in 1994, 19.9 per cent in 1995. The spread continued to move towards southward territory and reached almost below 7% with introduction of OGL in Oct’97 and removing SIL.

The current spread is as low as 3% and is calculated as shown in following table:

CURRENT INTERNATIOAL PRICE VIS-À-VIS  LOCAL PRICEA1 International prices of Gold at International

market$350 per ounce

A2 CIP Premium to import in India $0.75 per ounceA3 Exchange rate Rs.47 per USDA4 Cost of Gold landed at India (350+0.75)*47 Rs.17096 per

ounceA5 At conversion 32.15674 Rs. 5498 per 10

gmsB Add: Indian costB1 Service charges being charged by banks 0.10% Rs.5.50     / 10

gmsB2 Custom Duty Rs. 100    / 10

gmsB3 Sale tax 1% on (5498+5.50+100) Rs. 56      / 10

gmsB4 Total of added cost at Indian soil Rs. 161.50 / 10

gmsC Market Price (wholesale ) in India Rs.5660 / 10 gms

So the consumer pays only Rs 162 per 10 gms against the Landed cost of Rs.5,498/- per 10 gm and which is below 3% of total cost.

Indian Govt. Policy towards Gold

Bullion Imports and exports were banned under Foreign Exchange Regulation Act, 1973. Control over Gold production was assumed by the Mysore Government in November 1956. The official Gold stocks of the RBI were revalued in the same year. The proportional reserve system was replaced by the minimum reserve system, for the purposes of note issue.

In a major effort to mobilize the vast Gold reserves in the country, an issue of 15-year Gold Bonds at 6-1/2per cent was made in November 1962. The bonds were issued in exchange for Gold, Gold coin, and Gold ornaments. Subscriptions to those bonds were total of 16.30 tonnes. The issue of Gold bonds was accompanied by exhortations to the public to refrain from buying Gold and to surrender their holdings to the Government. The RBI also advised commercial banks to consider recalling loans made against the security of Gold. Forward trading in Gold was banned in November 1962.

The diversion of savings into the bullion market was sought to be controlled by the promulgation of Gold Control Rules in January 1963. The Rules prohibited manufacturing of Gold ornaments of more than 14-carat purity. Individual Gold holdings had to be declared. In July 1963, refineries were prohibited from manufacturing Gold of more than 14-carat purity. Control over internal trade and distribution of Gold by the Government was fully established in 1964.

A second attempt to garner Gold was made in March, 1965 when a new series of 7 per cent Gold Bonds 1980 was issued. Opportunity was given to holders of unaccounted Gold to convert it into these bonds. The quantity raised was 6.1 tonnes. A third series of Gold bonds designated as National Defense Gold Bonds, 1980 at 6.5 per cent was issued in October 1965. Unlike the earlier two issues, which were repayable in Rupees (the value of Gold being calculated at international prices), these bonds were redeemable in Gold of standard purity at maturity. The quantity raised at 13.7 tonnes.

Strict Gold control remained in force till November 1966, when the rules were amended, lifting the ban on manufacturing of ornaments of more than 14 carat purity. The amendments also placed ceilings on individual holdings and extended control over refineries and dealers. In September 1968, the Gold (Control) Act, 1968 was passed, establishing the scheme of Gold control on a permanent statutory footing. Except for some minor

modifications incorporated in the Act in 1969, 1972 and 1973, the structure of the Act did not undergo any change.

The Voluntary Disclosure of Income and Wealth (Amendment) Ordinance, 1975 granted immunity from confiscation, penalty, and prosecution under the Gold (Control) Act, 1968, to all disclosures of wealth and income in the form of Gold within the stipulated period.

In 1978-1979, there was a major shift in policy by the Central Government. This was reflected by the budget. The government strongly disapproved smuggling operations, considered a consequence of the difference between the domestic and international Gold prices. The Government that year undertook Gold auctions, which were construed as anti-inflationary measures to raise resources to bridge the budget deficit, which then was around Rs. 10.5 billion. It was also felt that sale of Gold from stocks held by the Government would curb smuggling to some extent. The Reserve Bank of India was chosen as the Government's agent in the sales operation. However, these auctions came in for criticism as it was concluded that this was not a practical proposition to either check smuggling or curtail domestic prices. The Government thus discontinued the official auctions in October 1978. Liberalization brought major changes in the regulations governing the purchase and ownership of Gold. Prior to 1991, Gold was allowed to be held only in the form of jewellery. This has been repealed and holding of Gold bars and coins is also permitted now. Under the NRI baggage rules, an NRI is entitled to bring in India 5 kilogram of Gold every six months by paying a nominal duty of Rs 220 per 10 gms. Import of plain Gold is now allowed on Special Import Licenses for sale to the domestic market. Under the SIL (Special Import License), exporters were allocated a percentage of their export earning to fund their imports. These licenses were traded and generally commanded at a premium of 8-12 percent depending upon demand and supply. It is estimated that around 75% of the total SIL issued was used for importing Gold and silver while 15% for EPCG and surrendering 10% for miscellaneous imports. Imports of Gold under SIL rose from 18.4 tonnes in 1994 to 42 tonnes in 1996. The removal of SIL requirement was done with import of Gold under OGL by nominated agency in later part of 1997.

The importance of Gold as was recognized by committee on CAC (Capital Account Convertibility).

The committee, which identified Gold related issues with Capital Account Convertibility, had given most precise and action oriented recommendation:

PHASE I: The main recommendation was to permit banks and FIs on fulfilling certain well defined criteria to be allowed to operate freelyin the domestic and international market . The said entities would be allowed to offer Gold related saving and loan products to the customers.

PHASE II: Steps to be taken by the Government and the RBI for developing a well regulated market in India for Gold and Gold derivatives including forward trading for resident and non-resident.

The Phase I recommendations were acted upon quickly. In July 1997, the RBI came out with a policy statement laying down criteria for authorizing commercial banks to join the ranks of a few state enterprises like MMTC, STC, HHEC and PEC as nominated agencies for importing Gold, silver and platinum. Initially, the nominated agencies were permitted to import Gold for export purposes only. Later in the year, they were allowed also to supply Gold by way of sale and lease for domestic use under a form of restricted "Open General Licence (OGL)" terms.

The Phase II recommendations which were to be taken up for implementation in 1998-99 could not find themselves in time boundary but the process has started now for implementation. The Government had launched a Gold deposit scheme in 1999 to utilize the idle Gold and simultaneously give a return to the Gold owners and reduce the country's reliance on imports.

Under the scheme, RBI permitted commercial banks to accept interest bearing Gold term deposit from public against physical deposit of Gold. An interesting feature of this scheme is that the deposit receipts are negotiable and are intended for trading in the secondary market. The idea here was to introduce paper Gold, which would satisfy the investment demands of those who seek to acquire Gold as an inflation hedge, or those who simply intend to go long on Gold. It was hoped that this would depress the import demand for physical Gold.

Another policy shift that became apparent in the late 1990s involved the delinking of Gold from the government's Anti-Black Money policy. The new fiscal stance with regard to black money centered on rationalization of the Income Tax structure and the creation of incentives for revealing unaccounted wealth.

Representative of Gold Trade CycleRepresentative of Gold Trade Cycle

COMMODITY FUTURES

BIGGER THAN STOCKS?

The global commodity trade is about three times the size of equities. But it is nowhere as hot in India. Futures trading could very well change all that.

WHEN the stockmarket is in the middle of a bull run that has so much momentum that it even takes a series of bomb blasts in Mumbai in its stride, it is difficult to imagine that there can be another market that could turn out to be bigger. But, globally, the size of the commodity trade is about thrice that of equities. And judging by the way activity in the commodity futures market is picking up, it could become as big as equities in a whileBefore going on with that story, a bit about commodity trading, particularly commodity futures, seems to be in order. There are two kinds trade in commodities. The first is the spot trade, in which one pays cash and carries away the goods. The second is futures trade. The underpinning for futures is the warehouse receipt. A person deposits a certain amount of, say, good X in a warehouse and gets a warehouse receipt which allows him to ask for physical delivery of the good from the warehouse. But someone trading in commodity futures need not necessarily possess such a receipt to strike a deal. A person can buy or sell a commodity future on an exchange based on his expectation of where the price will go. Futures have something called an expiry date, by when the buyer or the seller either closes (squares off) his account or gives/takes delivery of the commodity. The broker maintains an account for all dealing parties in which the daily profit or loss due to changes in the futures price is recorded. Squaring off is done by taking an opposite contract so that net outstanding is nil.

Today, it is possible to trade in commodity futures in India. Kailash Gupta, managing director, National Multi-Commodity Exchange of India (NMCE), one of the first national commodity exchanges to become operational in India, says that the biggest benefits will accrue to commodity traders, farmers and companies dealing in commodity-based products (like wheat and metals) by allowing them to hedge their risks. Then there are speculators, who are in the game only to make money out of the volatility in prices. But unlike in stocks, few retail investors are expected to trade in commodity futures since it requires a fair bit of expertise. Even those who do, will probably restrict themselves to trading in gold or silver.

The Present Status

Commodity futures have been allowed in India for some time, but the activity has remained largely restricted to a handful of regional exchanges and a few products. In fact, till April 2003 futures trading was allowed only in a limited number of commodities. But over the last year things have been hotting up. Two national commodity futures exchanges, NMCE in Ahmedabad and the National Board of Trade (NBOT) in Indore, have started operations. Another, National Commodity and Derivatives Exchange (NCDEX) in Mumbai, is to go live by October. That is to be followed by the Multi Commodity Exchange (MCX) in the same city.

As this story was being written, NMCE achieved a turnover of Rs 20,000 crore in eight months and set itself a target of Rs 50,000 crore for 2003-04. The government has also allowed futures in gold, silver, wheat and rice. In fact, NMCE says it will start gold futures from the end of September.

The present shift is as much towards better systems as away from the existing agricultural policy which protected and promoted the sector through procurement and controlled prices. "In view of the fiscal pressure and that of WTO (World Trade Organization) to reduce direct support to agriculture under the Agreement on Agriculture, towards a market-oriented approach," explains the report of the Inter-ministerial Task Force on Convergence of Securities and Commodity Derivative Markets headed by Wajahat Habibullah, secretary, Department of Consumer Affairs.

A look at commodity exchanges will give an idea about their scope. In the US, the Chicago Mercantile Exchange, over and above basic commodities, deals in a basket of products based on equity indices,

interest rates, weather and energy. In the UK, commodities, equities and interest rates are traded on the London International Financial Futures and Options Exchange. So, for Indian exchanges, the potential is huge.

And they are poised for growth. According to the Habibullah task force: "The total volume of futures trade has shown... about a two-fold increase from 217.72 lakh tonnes in 2001-02 to 414.11 lakh tonnes in 2002-03. In value terms, the turnover, which was about Rs 35,000 crore in 2001-02, has risen to over Rs 100,000 crore in 2002-03." Minister for Consumer Affairs, Food and Public Distribution Sharad Yadav has said the futures trading volume is set to reach Rs 200,000 crore in 2003-04.

The Regulator

If that indeed comes true, the futures market will need a strong and independent regulator. Unlike Sebi (Securities and Exchange Board of India, the capital market regulator), which is an independent body, the regulator of the commodities market, the Forward Markets Commission (FMC), is under the Department of Consumer Affairs and depends on it for funds. NCDEX managing director and CEO P.H. Ravikumar says: "We have requested the government to grant more powers to the regulator in order to ensure an orderly development of the commodity market. Due to the possible interplay between the equity and commodity markets we have recommended that there be greater co-operation (even a merger) between FMC and Sebi. The government is examining these issues." The co-operation between the regulators is not uncommon. In the US, for example, capital market regulator Securities and Exchange Commission (SEC) and commodity market regulator Commodity Futures Trading Commission (CFTC) work closely with each other. They have even issued rules jointly.

The Warehousing System

For commodity futures to work, the seller should be able to deposit the commodity at warehouse nearest to him and collect the warehouse receipt. The buyer should be able to take physical delivery at a location of his

choice on presenting the warehouse receipt. But in India at present, only a few warehouses provide delivery for specific commodities. The Habibullah task force report says: "...There are important gaps... A sophisticated warehousing industry has yet to come about." Such a system has to certify commodities for quantity and grade so that there are no surprises for whoever takes final delivery. Warehouses can tie-up with specialised agencies for this or build their own capabilities. N.K. Choubey, chairman of NMCE and managing director of Central Warehousing Corporation, says: "This means labs have to be set up to take care of a group of warehouses in a region." CWC has 493 warehouses (capacity: 9.3 million tonnes).

At present, the farmer has to sell his produce at a mandi as the warehouses are not nearby. So, Gramin Bhandaran Yojana, a scheme for construction and expansion of rural godowns, has been introduced. This will give the farmer easier access to warehouses and warehouse receipts. So he will be able to take loans against them or trade in futures. But before banks accept such warehouse receipts as collateral, a standard system of accrediting such godowns and grading the produce will be needed.

Physical deliveries make up just 1-5% of commodity futures, but with the growth of the market in absolute terms, volumes are expected to rise. As there is a lack of a nodal agency for regulating the warehouses, exchanges

have to rely on the warehouses and also come up with their own methods to improve systems.

The number of warehouses offering delivery with the requisite systems will need to increase quickly. Otherwise although nationwide trading will become possible, the capability of ensuring physical delivery by the seller broker at warehouses in different locations will not be in place. Another aspect to watch out for is the privatisation of state warehousing companies, on which there seems to be no headway as of now.

The Spot Markets

The Agmark website displays prices at various mandis and there are big differences (See 'Variation Across Spot Markets'). "The prices at the website are not very useful (for commodity futures) due to big variations in rates," says an NMCE member. This fragmentation of spot markets means that the rates of the same variety and grade are not comparable. "Prices will become more relevant if commodities are standardised across states," says Susan Thomas, an assistant professor at the Indira Gandhi Institute of Development Research who has written extensively on derivatives and agricultural markets. One way to do that is to adopt the international norms. Also collection and dissemination of prices from all major mandis will help farmers get better prices and reduce arbitrage. Restrictions and taxes imposed by the various states on the commodity markets also hinder free trade. The task force says "commodities like cotton continue to be subject to restrictions under the Essential Act".

Says a Chandigarh flour mill owner: "Unless the government deregulates the prices of wheat and paddy and brings in uniform state taxes, the futures trade in these commodities will not take off." Another problem is the minimum support price system, which is likely to stay.

The Exclusion Of Banks

Under the Banking Regulation Act, banks in India cannot trade in commodities other than gold and silver. Globally, however, they are big players in this market. Says Gupta: "If a farmer wants to take a loan with his crop as the collateral, the bank must be allowed to hedge its risk by taking a position in the futures market."Is an amendment to the Banking Regulation Act likely? According to the Reserve Bank of India (RBI): "At present there is no move to allow banks into commodity markets." Why? RBI says the issues are what a regulator may have if its subjects undertake speculative activity." Banks as marketmakers helped build the equity and corporate debt market by adding depth, liquidity and stability. But banks cannot play that role in the commodity market.

P.H. Ravikumar feels the online warehouse receipt system will revolutionise the commodity futures market in India by making delivery via online receipts possible.

N.K.Choubey emphasis that a sophisticated warehousing system has to develop to facilitate the growth of commodity futures.

Kailash Gupta says gold futures will bring both speculators and bullion traders to the commodity exchanges and, thereby, give turnover a fillip.

The Rules for Equity Brokers

As per Securities Contract Regulation Act (Rules), equity traders are not allowed to trade directly in commodities. The Ramamoorthy Committee set up by Sebi and the inter-ministerial task force has recommended that stockbrokers be allowed into the commodity market through separate entities and not through the company in which they are trading in stockmarkets. This is the practice at present. Equity brokers have tied up with various mandi operators and set up separate companies to trade in the commodity space. Even in such arrangements there are some points which need clarification, points out Ravikumar. Commonality of active director is one. "There is some confusion about whether there can be a commonality of active directors (in the two companies)?" An NMCE member says: "The directors in the equity and commodity trading company could be common if a no objection certificate is obtained from the existing exchange while applying to the another exchange."

"In global markets equity traders are allowed to directly participate in both the markets provided they have high net worth. This ensures that they have reasonably large capital and reserves before they are permitted to access both the markets," explains Ravikumar. Other than active members, there are brokers who have taken up membership and floated new companies but are playing a wait and watch game. They are

experimenting by trading in different commodities to get a feel of the system.

Cash Settlement and Options Trading

Currently cash settlement of outstanding contracts at maturity is not allowed by the Forward Contracts (Regulation) Act (FCRA). "What this means is that at maturity a party can ask for delivery. To avoid this, traders square-off their positions before maturity, which is practically equivalent to cash settlement," says Thomas.

Cash settlement is a must for trading in index-based commodity derivatives and other instruments like rainfall index derivatives and weather derivatives which will come up once the market is ready. The task force says: "On the commodity futures in India today, cash settlement is the de facto practice, even though it is not permitted de jure." Therefore, there is a need to align the law with the practice and make the necessary amendments.

"The proposals to allow options in commodities and provide for registration of brokers has been pending in Parliament for over five years," says Gupta. Adds Ravikumar: "We have made a representation to the FMC and the government and we are hopeful that commodity options trading in India will become a reality soon. We believe the FCRA is coming up for amendments in the next session of Parliament."

The existing network of regional exchanges has confined itself to few commodities. After the national exchanges come up, what will be the role of these exchanges? Will they align with the national exchanges or will their fate be similar to regional stock exchanges, which have come to a dead end? And how will the tea auctions houses, Coffee Futures Exchange, etc., be affected in the emerging scenario? Furthermore, the hawala markets, which have been operating for decades, trade 20-30 times the volume of official futures exchanges. Will the regulator be able to curb them and will the new exchanges attract them? Clear answers will emerge only in the future. That will be another story.

STOCK EXCHANGES IN INDIA

Ahmedabad Coimbatore Mumbai

Bangalore Gauhati Mangalore

Baroda Hyderabad New Delhi

Bhubaneswar Indore OTCEI

Calcutta Jaipur Patna

Madras Kanpur Pune

Cochin Ludhiana Rajkot

AHMEDABAD Name of Stock Exchange

The Stock Exchange, Ahmedabad 

 Address Kamdhenu Complex, Opp. Sahajanand College, Panjarapole, Ambawadi,  AHMEDABAD-380001. 

 Phone (+91-079) 6449460, 6446733, 6441842, 6443058 

 Fax (+91-079) 6442222 

 Tel. (+91-079) 6443131, 6447171 

 Fax (+91-079) 6449966 / 448822 

BANGALORE Name of Stock Exchange

Bangalore Stock Exchange Ltd., 

 Address "Stock Exchange Towers",  No. 51, Ist Cross, J. C. Road,  BANGALORE : 560 027 

 Tel. (+91-0281) 2995229, 2995234, 2995235 

 Fax (+91-0281) 2995242 / 2277160 

 Tel. (+91-0281) 3311456 

BARODA

 Name of Stock Exchange

Vadodara Stock Exchange Ltd., 

 Address Fortune Towers, Dalal Street, Sayajigunj,  BARODA 390 005.

 Tel. (+91-0265) 340378 

 Fax (+91-0265) 331452 

 E-mail vse@lwbdq.lwbbs.net

 Tel. (+91-0265) 361433 

BHUBANESWAR Name of Stock Exchange

Bhubaneswar S. E. Assoc. Ltd. 

 Address Falcon House, A- 22 Jharpara, Cuttack Road,  BHUBANESWAR 751 006. 

 Tel. (+91-0674) 582340, 582341, 582140 

 Fax (+91-0674) 582283 

CALCUTTA Name of Stock Exchange

Calcutta Stock Exchange Assoc. Ltd., 

 Address 7 Lyons Range,  CALCUTTA 700 001.

 Tel. (+91-33) 220 6136, 3741, 1489, 1488, 6987 

 Fax (+91-33) 2202514 

 Tel. (+91-33) 2206136 

MADRAS Name of Stock Exchange

Madras Stock Exchange Ltd., 

 Address 11 Second Line Beach, Post Box No. 183,  MADRAS 600 001. 

 Tel. (+91-44) 510845, 512237 

 Fax (+91-044) 5244897 

 Tel. (+91-44) 5221070 

COCHIN Name of Stock Exchange

Cochin Stock Exchange Ltd., 

 Address Post Box No. 3529, Veekshanam Road, 

Ernakulam,  COCHIN 682 035. 

 Tel. (+91-0484) 369020, 367728 

 Fax (+91-0484) 364864, 370471

 Tel. (+91-0484) 364578, 367728

COIMBATORE Name of Stock Exchange

Coimbatore Stock Exchange 

 Address "CSX Towers", 683-686 Trichy Road,  Singanallur,  COIMBATORE 641 005. 

 Tel. (+91-0422) 315100,315102 

 Fax (+91-0422) 314937 

 Tel. (+91-0422) 572714

GAUHATI Name of Stock Exchange

Gauhati Stock Exchange Ltd., 

 Address Saraf Buildings Annexe, A. T. Road,  GAUHATI 781 001(ASSAM). 

 Tel. (+91-0361) 533667, 533670, 72, 73 

 Fax (+91-0361) 543272 

HYDERABAD Name of Stock Exchange

Hyderabad Stock Exchange Ltd., 

 Address 3-6-275 Himayatnagar,  HYDERABAD 500 029. 

 Tel. (+91-040) 597709, 10, 12 

 Fax (+91-040) 240804 

 Tel. (+91-040) 4618251 

INDORE Name of Stock Exchange

Madhya Pradesh Stock Exc Ltd., 

 Address Rajani Bhawan, 3rd Floor, M. G. Road,  Opp. High Court,  INDORE 452 002. 

 Tel. (+91-0731) 432841-46 

 Fax (+91-0731) 432849 

 Tel. (+91-0731) 432844 

JAIPUR Name of Stock Exchange

Jaipur Stock Exchange Ltd., 

 Address Rajasthan Chamber Bhavan, M. I. Road,  JAIPUR 302 001.

 Tel. (+91-0141) 564962, 568335, 563521, 560201 

 Fax (+91-0141 ) 563517 

 Tel. (+91-0141) 563521, 565163 

KANPUR Name of Stock Exchange

Uttar Pradesh Exchange Assoc Ltd., 

 Address Padam Towers, 14/113 Civil Lines,  KANPUR 208 001. 

 Tel. (+91-0512) 293115, 293174, 293134, 293437 

 Fax (+91-0512) 293175 

LUDHIANA Name of Stock Exchange

Ludhiana Stock Exchange Assoc. Ltd., 

 Address Phiroze Gandhi Market,  LUDHIANA 141 008. 

 Tel. (+91-0161) 39318, 39319 

 Fax (+91-161) 405756 

MUMBAI Name of Stock Exchange

The Stock Exchange, Mumbai 

 Address Phiroze Jeejeebhoy Towers, Dalal Street,  MUMBAI 400 023. 

 Tel. (+91-22) 2655581, 2655626, 2655860-61 

 Fax (+91-22) 2658121 

 Tel. (+91-22) 265566

MANGALORE Name of Stock Exchange

Mangalore Stock Exchange Ltd., 

 Address Kodialbail, 4th floor, Ram Bhavan Complex,  MANGALORE 575 003. 

 Tel. (+91-0824) 441214, 440813/ 581/ 275/ 597/ 254 

 Fax (+91-0824) 440736 

 Tel. (+91-0824) 351137, 22361 

NEW DELHI Name of Stock Exchange

Delhi Stock Exchange Assoc. Ltd., 

 Address 3&4/4B, Asaf Ali Road, Near Turkman Gate New Delhi - 110006. 

 Tel. (+91-11) 3724387, 3352951 

 Fax (+91-11) 3379660, 3271302 

 Tel. (+91-11) 6219593, 6420710 

OTC EXCHANGE OF INDIA

 Name of Stock Exchange

OTC Exchange of India, 

 Address 92 Maker Towers 'F', Cuffe Parade,  MUMBAI 400 005. 

 Tel. (+91-22) 2188164-68/2188511

 Fax (+91-22) 2188012/2188503

 Tel. (+91-22) 2068468

PATNA Name of Stock Exchange

Magadh Stock Exchange Association, 

 Address Ashiana Plaza, 9th Floor, Budh Marg,  PATNA 800 001. 

 Tel. (+91-0612) 223644, 222852 

 Fax (+91-0612) 220960 

 President  -

 Tel. (+91-0612) 226568, 235712 

 Fax (+91-0612) 235712 

PUNE Name of Stock Exchange

Pune Stock Exchange Ltd., 

 Address PMT Commercial Building, Deccan Gymkhana,  PUNE 411 004.

 Tel. 328771, 772, 782, 783, 786 

 Fax 212 328773 

BSE TRAINING INSTITUTE(BTI) INFORMATION

VISION

To be Center of Excellence for studies in Capital Markets and related areas.

MISSION

To make it a world class Institute.

To discover and develop capital market products much ahead of time.

To spread education related to capital markets through most advanced technology at affordable price.

To enter into alliances with reputed Institutes having similar goals & objectives.

A BRIEF BTI conducts training programs for various intermediaries in the capital markets as well as investors. The areas of training include highly specialized courses in various areas of capital markets offering quality-training programmes.

CONCLUSION

From the practical experience and analysis from commodity exchanges and stock exchanges, we can say that commodity exchange is very

developing concept. As India is an agriculture country, commodity exchange is playing a very important role in Indian economy. The future of commodity trading would be excellent and bright. This statement, we can say based on our study and diagnoses that commodity trading will take place of stock exchange in future. The National Multi commodity exchange was setup in September 2001, but it has grown very rapidly now, It has increased its operation throughout India. It is one and only commodity exchange which is traded through high computerized technology. We thanks to the National Multi commodity exchange (NMCE) for providing such a detailed and wonderful information and guidance to us group members. We wish best of luck to National Multi commodity exchange (NMCE) for better future.

BIBLIOGRAPHY

1. Web sites of some exchanges:-

www.nmce.com www.bseindia.com www.nse.com www.mcdex.com

2. Books:-Business environment Financial Management – M.Y. Khan & P.K. Jain

3. References:-Business Standard (The smart investors)

Economics Times The Times of India Gujarat Samachar

4. Visits:-National Muti-Commodity exchangeAhmedabad Stock exchange