Mumbai: National Spot Exchange Ltd, India's biggest bourse for trading physical gold, will offer contracts in small denominations, aimed at households in the world's largest consumer of the precious metal.
The exchange will offer contracts of between 8 grammes and 1 kilo, Anjani Sinha, managing director, said in an interview on Tuesday.
The Multi Commodity Exchange of India Ltd and the National Commodity and Derivatives Exchange Ltd, India's biggest commodity bourses, only trade gold futures.
That forces individuals to buy or sell bullion through jewellers and banks in the physical form. Households in India have 25,000 tonnes locked away in family vaults, according to the National Spot Exchange.
"Our main aim is to tap the huge household stock," said Sinha in a phone interview. "There's no transparent, electronic market with a nationwide reach for spot gold" in India, he said.
India imports about 800 metric tonnes of gold a year, about a quarter of the world's production, and more than three-quarters of which are used in jewellery.
Still, the absence of a national spot market means jewellers and traders set the benchmark rate using London's morning/afternoon 'fixing', the price used by some global mining companies to sell their output.
Small-sized gold contracts may not help India become a price-setter in the global physical bullion market as the country's commodity exchanges are dominated by traders, producers and consuming companies, compared with the 13 million individual investors who trade stocks.
"The penetration of the gold market through exchanges in India is still meagre compared with stocks and to that extent it's early to say how many households are net-savvy to trade gold electronically," said Si Kannan, associate vice-president at Kotak Commodity Services Ltd. "People in the villages may still prefer to sell to a jeweller."
Sellers using the National Spot Exchange will take their gold to approved refineries which will turn it into bars of international standard purity, Sinha said.
The refinery will charge Rs75 ($1.57) to convert 100 grammes of gold and the exchange will levy a fee of Rs20 for every Rs100,000 worth of bullion traded.
The National Spot Exchange is 99 per cent owned by Financial Technologies India Ltd, founder of the Multi Commodity Exchange, the world's third-biggest bullion bourse.
The exchange will offer contracts of between 8 grammes and 1 kilo, Anjani Sinha, managing director, said in an interview on Tuesday.
The Multi Commodity Exchange of India Ltd and the National Commodity and Derivatives Exchange Ltd, India's biggest commodity bourses, only trade gold futures.
That forces individuals to buy or sell bullion through jewellers and banks in the physical form. Households in India have 25,000 tonnes locked away in family vaults, according to the National Spot Exchange.
"Our main aim is to tap the huge household stock," said Sinha in a phone interview. "There's no transparent, electronic market with a nationwide reach for spot gold" in India, he said.
India imports about 800 metric tonnes of gold a year, about a quarter of the world's production, and more than three-quarters of which are used in jewellery.
Still, the absence of a national spot market means jewellers and traders set the benchmark rate using London's morning/afternoon 'fixing', the price used by some global mining companies to sell their output.
Small-sized gold contracts may not help India become a price-setter in the global physical bullion market as the country's commodity exchanges are dominated by traders, producers and consuming companies, compared with the 13 million individual investors who trade stocks.
"The penetration of the gold market through exchanges in India is still meagre compared with stocks and to that extent it's early to say how many households are net-savvy to trade gold electronically," said Si Kannan, associate vice-president at Kotak Commodity Services Ltd. "People in the villages may still prefer to sell to a jeweller."
Sellers using the National Spot Exchange will take their gold to approved refineries which will turn it into bars of international standard purity, Sinha said.
The refinery will charge Rs75 ($1.57) to convert 100 grammes of gold and the exchange will levy a fee of Rs20 for every Rs100,000 worth of bullion traded.
The National Spot Exchange is 99 per cent owned by Financial Technologies India Ltd, founder of the Multi Commodity Exchange, the world's third-biggest bullion bourse.