Thursday, December 09,
Days after India drafted a bill to give more powers to FMC, the commodity regulator said it is considering a proposal by two leading exchanges to launch iron ore futures.
In an interview to Financial World, FMC chairman BC Khatua said some settlement-related issues for trading in iron ore futures remained the only obstacle before giving green signal to country’s two leading commodity bourses, Multi Commodity Exchange (MCX) and Indian Commodity Exchange (ICEX) for iron ore futures.
A futures contract would work effectively only when there a counter-party. It will enable steel companies to manage price risk for the steelmaking ingredient.
Analysts believe that iron ore futures are feasible and will help steelmakers hedge against fluctuations in prices. Some dealers also said it will help the commodity exchanges boost trading volumes.
Indian Commodity Exchange (ICEX) has already signed a Memorandum of Understanding with the Singapore-based globally reputed organization Iron Ore and Steel Derivatives Association (IOSDA), for the growth and development of iron ore and steel derivatives.
The futures market for iron ore and iron ore spot market have only recently begun to take shape and as such, both are in need of a firm reference-price mechanism.
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