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There is an increasing tendency to discredit the prices discovered through the commodities trading portal. It is time immediate action was taken to arrest this trend. Commodity trading can be successful only when the warehouses play their intended role. Without proper storage facilities, it will be impossible to attract investor funds, which bring stability and the needed liquidity to the market. MCX and NCDX should build additional warehouses, preferably through the pubic-private partnership route.

Another key factor will be the use of technology. Needed are trading terminals in regional languages to attract small traders to participate in the exchange. Provision of such terminals at strategic locations could increase participation. Till volumes pick up, it is necessary to provide checks to arrest price volatility in the illiquid counters.

Balakrishnan.V

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Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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