The country’s latest com­modity exchange to go onl­ine with a national presence, ACE Derivatives & Comm­odity Exchange, began with anchor promoter Kotak-gro­up’s takeover of the decades-old Ahmed-abad Commod­ity Exchange. CEO Dilip Bh­atia tells So­umik Dey about his ex­pansi­on pl­ans. Excerpts:

What are the contracts that the exchange is dealing with and which new products are you contemplating?

We have three contracts each in rapeseed, soybean, soy oil, castor seed and chana. All put together we have 14 contracts. These are quite actively traded and in fact we are the only exchange that offers contracts in castor seed. By the end of the current fiscal we are contemplating to launch futures contracts in crude oil, natural gas, precious metals and su­gar. We are working on introducing some new commodities in agriculture products and metals.

Are you leveraging the excha­nge to be a major player in the agro-commodities space?

We believe that there is huge untapped potential in agriculture in this country. Sugar contracts will see us on a level playing field with other exchanges, and we are hop­eful that contracts could be laun­ched soon. Metals and energy co­mmodities are also shining, but India’s position as one of the top global producers in agriculture needs to be leveraged.

Do you plan to set up spot markets and terminals?

Eventually we will look to venture into spot markets to make our future rates more determinant and explore unique opportunities for our niche products.

How many members are registered with your exchange?

From the time our exchange we­nt online on October 27, we have registered 180 members. In the beginning we had started with 45 registered members who were already registered with the Ahmedabad Commodity Exch-ange, whi­ch dealt majorly in castor seed in the open-cry method. While member registrations are still on, about 100 are active. We have about 200 trading terminals across the country.

From where do you chart your ma­j­or growth opportunities and from what sort of investors?

We see huge growth opportunity from Rajasthan, Ma­dhya Prade­sh and NCR. A lot of retail partic­ipants are ke­en to join the commodities market. Many export houses and producers who use agro-commodities as major inputs are present in this region and are looking at opportunities to hedge their positions and we are trying to tap them as well.

Being the fifth commex to launch its national operation, is there a tough competition?

We have the advantage of entering the exchange business after learning from mistakes by others. We have more relevant delivery centres for starters. Our spot pri­ces are more up to date as periphery centres along with main markets are included in our price po­lls to provide more accurate cues. This curtails risk of speculative activities engaged by bigger players. Also we have improved the system for settlement price fixation. Settlements on our exchan­ge are based on last three days sp­ot prices rather than the spot pr­ice on the day of settlement.

You have invested heavily in technology for the exchange. Can you share some details?

We have invested about Rs 25 crores in IT platforms. The first innovation was a workflow software that we have introduced at both our and the client’s end.Sify is our networking partner.

By when do you see breakeven and what are the challenges?

We have the same Kotak philosophy of building a business. So break even is not a pressure. On challenges, I would say availing market liquidity is a challenge. Our focus is not to just induce volumes by attain higher opening interest in all our contracts.