News: 'Indians can emerge as global traders'

(FE 20/05/2006) Mumbai - India is set to emerge as the most trading savvy nation in the commodities arena compared to its other Asian peers in the near future. Language skill in English is expected to be the driver just as it did for the information technology and software industry in the nineties.

“I see a huge potential in India for both its domestic and global markets. Indians have a knack for trading and wide spread knowledge of English can actually aid boost trading,” Charles Farra, managing director, Business Development-Asia Pacific, Chicago Board of Trade (CBOT) told FE on the sidelines of a presentation organised by Kotak Commodity Services.

The 158 year-old CBOT that has gained a market share of 40% in the US market is extending its reach to various countries. The volumes on the exchange jumped after it introduced e-CBOT in October 2005, the 22 hour electronic platform for futures trading.

Mr Farra is in India to encourage the country’s trading community to trade on CBOT which is providing a diverse mix of financial, equity and commodity futures and options-on-futures products.

Agreeing on the fact that Indians were trading savvy, Suresh Kotak, chairman of Kotak Commodities stated that he too earlier used to trade on US markets for cotton and Brazilian markets for castor.

Indians have been trading on overseas commodities markets using different channels to hedge risk in absence of domestic facility till 2003. However, on reports of unofficial trading on foreign exchanges from India, commodities market regulator Forward Markets Commission (FMC) reiterated that such trading was illegal unless approved by the government of India.

Investors, companies or institutions wishing to trade on overseas exchanges have to get Reserve Bank of India (RBI) approval. Though, individuals can invest upto $25,000 under the liberal forex provision.

Meanwhile, CBOT announced that its 100% electronically traded precious metals complex set an all-time high, as volume reached 1,02,237 contracts at the close of trading on Thursday. The previous record, 1,00,589 contracts, was reached on May 11, 2006.

In addition, for the second time this week, the exchange set a new record for total open interest. The new open interest record 1,70,13,590 contracts, tops the earlier record of 1,68,41,302 contracts set on Monday, May 15.

The CBOT’s gold futures complex set a new volume record of 90,021 contracts, a 10% rise compared with the old record of 81,797 contracts set May 11, 2006. Volume in the CBOT full-sized gold (100 oz) futures increased 11%, climbing to 62,003 contracts on May 11.