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National Spot Exchange, promoted by Financial Technologies India Ltd.(FTIL) and National Agricultural Co-operative Marketing Federation of India Ltd (NAFED) yesterday, commenced the third round of auctions of Food Corporation of India’s (FCI) for selling wheat under OMSS from three depots in Delhi viz. Ghevra, Mayapuri and Narela. The auction was held between 10:00 am to 11:50 am and witnessed a sale of 750 MT. The highest bid received in auction was Rs. 1260 per quintal and the lowest bid, which is also incidentally the floor price fixed by the Government, was Rs. 1254.08 per quintal.
Shri Subhash Zadoo, General Manager, FCI Delhi, said, “The use of electronic platform for releasing stocks under OMSS (D) bulk to the empanelled bulk consumers makes it more prudent and efficient. The efficiency of the system lies in its uniqueness for quoting rates in a transparent manner and faster settlement cycle coupled with counter guarantee of trades. Even though the prices in physical market in Delhi were round the floor price, we received good response today due to initiatives taken by National Spot Exchange.”
Mr. Anjani Sinha, MD & CEO, NSEL said, “We are happy that leading Government organizations like FCI are using our platform. There is convenience to both buyers and sellers to place order electronically and carry out transaction in a hassles free manner. I am sure that after this successful performance, FCI will commence use of our facilities also at other parts of the country.”
In March, 2010, NSEL signed agreement with FCI for selling wheat under OMSS in Delhi and to activate the same, FCI took membership of NSEL at the same time.. The government releases excess stocks available after public distribution through an open market sales scheme (OMSS) to stabilize prices every year.In physical market in Delhi, prices are around Rs. 1245 per quintal, but still NSEL has been able to capture good response due to its marketing efforts. For carrying out sale of FCI wheat, NSEL has launched a tailor made e-auction contract for FCI. Under this contract, FCI is the single seller while buyers could be any flour mills across the region, which have been empanelled with FCI. FCI quotes its floor price and the quantity and buyers have to bid for the same through NSEL platform.
Upon confirmation of trade, payment is made to the exchange on the designated days. The Exchange transfer funds to FCI electronically and then, FCI issues Delivery Orders in favor of the buyers. Buyers are required to lift the delivery from the designated warehouse. As trade confirmation is done online, faster settlement is achieved by ensuring timely delivery and payment. Since NSEL provides counter party guarantee, FCI is assured that whatever trade has happened will be honored and there will be no default. Furthermore, there is transparency in the entire sale with availability of complete audit trail of all orders, trade and MIS. Selling through this mechanism provides a strong price signal to entire physical trade.
NSEL has its presence in Maharashtra, Delhi, Rajsathan, Bihar, Gujarat, Madhya Pradesh, Karnataka, Andhra Pradesh, Tamilnadu, Kerala and Orissa with more than 223 active standardized contracts for Arecanut, Barley, Bajra, Castor Seed, Castor Oil, Cotton bales, Cotton Seed Wash Oil, Lemon Tur, Maize, Urad, Yellow Peas, Soyabean, Wheat, Groundnut, Guar seed, Chana, RM seed, Jeera, Guargum, RBD Palmolein being traded through its large network of 338 members which includes Government organizations like MMTC, PEC, NAFED, FCI and CCI.
