Spot exchanges to help in trading warehouse receipts: Survey

Spot Exchanges, which have expanded significantly in 2009, will not only benefit farmers and producers but will also provide a platform for trading of warehouse receipts, the pre-Budget Economic Survey said. A warehouse receipt is a quality and quantity certificate that allows transfer of ownership of a commodity even without physical delivery. Trading in such receipts is allowed in the Warehousing (Development & Regulation) Act, which was passed in 2007, but is yet to be notified. Warehouse receipts also help farmers take loans from banks against their farm produce. "The efficiency level attained as a result of such seamless spot transactions would result in major benefits for both producers and farmers. These spot exchanges will also provide a platform for trading of warehouse receipts," the Survey, which was presented in Parliament today said. At present, National Spot Exchange Ltd, NCDEX Spot Exchange Ltd and National Agriculture Produce Marketing Company are three spot exchanges in the country. Unlike wholesale mandis, farmers and end-users can trade commodities at the spot exchange on real-time basis through electronic counter, thus reducing cost of intermediaries and enhancing price realisation for farmers. The spot bourses would enable farmers to trade seamlessly on the platform by providing real-time access to price and a simplified delivery process. While buyers would also have the simultaneous access to the exchanges to procure commodities at the best possible price, the Survey said.