National Commodity Exchange Limited

National Commodity Exchange Limited(NCEL):

It is similar to a stock exchange, where trading is done by the members of the commodity exchange, authorized and licensed to trade on behalf of clients; the trading is mainly in futures contracts in commodities, minerals or precious metals. It was established on April 20, 2002 and the permission was granted by SECP on May 16, 2002. The shareholders of NCEL are National Bank of Pakistan, Karachi Stock Exchange, Lahore Stock Exchange, Islamabad Stock Exchange, Pak Kuwait Investment Company (Pvt.) Limited, and Zarai Taraqiati Bank Ltd and it is regulated by Securities and Exchange Commission of Pakistan.

National Commodity Exchange Limited (NCEL) is the first technology driven demutualized online commodity futures exchange. Trading of commodities can be done online through the internet. Initially, NCEL provides trading facilitates in Gold, Cotton Yarn, Sugar, Rice and Wheat. In the second phase, NCEL will also list financial futures contracts.

NCEL Commodity Index is an equally weighted price index that represents price movements of a portfolio of physical commodities listed on NCEL. The Index is based on a composition of 5 commodities available for trading on NCEL covering Gold, Silver, Crude Oil, Palm Oil and IRRI-6 Rice.

NCEL is Central Counterparty. NCEL becomes a buyer to every seller and a seller to every buyer and guarantees settlement. The risk of each counterparty is transferred to a Central Counterparty (CCP).

Bilateral versus CCP (Multilateral)

Commodities Traded:

Rice

• NCEL IRRI-6 Weekly Rice Futures Contract

• NCEL IRRI-6 Rice Futures Contract

Palm Oil

• NCEL Palm Olein Futures Contract

Gold

• NCEL One Tola Gold Futures Contract

• NCEL Gold (1 Ounce) Futures Contract

• NCEL 100 Ounces Gold Futures Contract

• NCEL 100 Tola Gold Futures Contract

• NCEL 50 Tola Gold Futures Contract

• NCEL Kilo Gold Futures Contract

• NCEL Mini Gold Futures Contract

• NCEL Gold Futures Contract

Silver

• NCEL Silver (500 Ounces) Futures Contract

Crude Oil

• NCEL Crude Oil Futures Contract

Interest Rates

• NCEL 3-Month KIBOR Futures Contract

Trading:

Trading is done by two ways:

1. Trading through broker

2. Direct access to market

In both cases broker is obligator to exchange. He should ensure that clients comply with NCEL Regulations; he should see that all client margins are paid. Broker earns commission from both type of clients, he earns less if there is direct access to market.

Recent Development:

National Commodity Exchange Limited (NCEL) reached new record levels during November with total traded value amounting to Rs 35 billion. Total number of contracts traded crossed the 100,000 per month level for the first time. In addition, a record number of brokers were active during the month with the Clearinghouse Settlement Guarantee Fund crossing Rs 300 million marks.

This rise in activity amounts to 44 percent