News: Chicago Mercantile Exchange to enter India

(RTR 23/09/2006) New Delhi - The Chicago Mercantile Exchange could enter India's booming commodity derivatives market if the government relaxes its rules, managing director John Davidson said on Friday.

CME also plans to offer its expertise to exchanges in India, and is eager to help enable trading of Indian commodity derivatives elsewhere, Davidson told Reuters in an interview while on a trip to India.

"The Indian commodities market is growing at a remarkable pace," he said. "I think we will set up an office here sometime, but I don't know when."

"US investors will be interested in Indian commodity market as they have been in equities," Davidson said.

India allowed trading in commodity futures in 2002. Three exchanges -- the National Commodity and Derivatives Exchange, Multi Commodity Exchange, and National Multi Commodity Exchange -- were set up in 2003.

Trading volumes in these exchanges totalled 15.6 trillion ($340 billion) rupees during April to August. Volumes were 21 trillion rupees during the fiscal year to March 2006.

Asked if the CME would be interested in picking up a stake in any of the Indian commodity exchanges, Davidson said: "There is always a possibility, but there is no specific plan as of now."

Davidson met officials of financial and commodity regulators, and the finance ministry in the last few days.

A bill is pending in parliament to permit foreign players to pick up stakes in Indian exchanges and take positions in commodity futures. India's commodity market regulator does not allow banks and financial institutions, both domestic and foreign, to trade in these markets.

The CME could help Indian exchanges start trade in a variety of economic derivatives such as those based on inflation, housing prices and non-farm employment, Davidson said.

The CME, the largest futures exchange in the United States and owner of largest futures clearing house in the world, offers trading in derivatives of interest rates, equities, foreign exchange, agricultural commodities and alternative investments.