NCDEX has decided to relaunch black pepper futures. It will revive one of its most significant contracts and restore a pricing mechanism, which was missing in the commodity markets for over a decade and a half. The contract will start trading from July 15.
Initially, four contracts expiring in August, September, October, and November will be available for trading
As part of its expansion plans, the exchange also plans to launch equity trading in cash segment and to venture into mutual fund distribution by end of this month.
The exchange had recently raised ₹770 crore to strengthen the exchange platform and venture into new business.
Ceding discovery role
Dr Arun Raste, Managing Director and CEO of NCDEX, said that India was one of the world’s largest producers and consumers of black pepper but has gradually ceded its role in global price discovery for the commodity.
The relaunch of black pepper futures is an effort to bring that benchmark home to create a transparent, credible and India-centric reference price for the trade, he said.
A robust derivatives market will help farmers, processors, exporters and traders manage volatility more effectively, while strengthening India’s position in the global spice ecosystem, he said.
The exchange also plans to venture into facilitating trading in equities and to take up distribution of mutual funds as part of business diversification. An announcement of MF platform launch is expected by July-end, said Raste.
Long-standing gap
Even as NCDEX grows into a multi-asset exchange, it will remain deeply committed to commodity segment, enhancing the product basket, he added.
Kedar Deshpande, Chief Business Officer of NCDEX said, with no active global derivatives benchmark currently available for black pepper, the relaunch fills a genuine and long-standing gap.
It gives the entire spice ecosystem, from growers to exporters, a transparent, regulated platform for pricing and risk management, while reinforcing India’s position in global spice trade, he said.
In 2010, NCDEX suspended the black pepper futures contract following severe quality disputes, including mineral oil adulteration in exchange-accredited warehouses. This resulted in litigation, frozen trading and legal hurdles that lasted over a decade. However, the exchange has received SEBI to relaunch the contract now.
The exchange has now revised contract specifications incorporate enhanced quality parameters aligned with FSSAI standards. These include stricter norms relating to moisture content and mouldy berries, among other quality measures, to strengthen quality assurance and mitigate the risk of adulteration, said the exchange.