BACKGROUND NOTE  

1. Introduction: Karvy Comtrade Ltd has taken membership of Spot Exchange, presently of National Spot Exchange Ltd (NSEL) which has been allowed and permitted by Government of India. NSEL is promoted by NAFED and FT. It is a national level institutionalized, electronic, transparent spot exchange, which is poised to transform the rural economy.  It is a state-of the-art unique market place providing customized solutions to various problems faced by the farmers, traders, processors, exporters, importers, investors and the general mass.    
2. Mission:  The mission of National Spot Exchange is to create a structured Common Indian market, which becomes a benchmark market for all agricultural and non agricultural commodities. The objective is to develop a compulsory delivery based spot market for commodities, which facilitates seamless and risk free environment in physical market of commodities. The goal is to reduce cost of intermediation by improving efficiency in agricultural marketing through bringing farmers and processors/ exporters on a nation wide platform and thereby to increase farmers realization without increasing consumer paid price.  
3. Objectives of National Spot Exchange:  
   • To provide an effective method of spot price discovery, in various commodities, in a transparent manner.
   • To create a market where farmers can sell their produce and realize sale proceeds at the best prevailing price.
   • To create a market where the processors, end users, exporters, corporate (both private and government) and other upcountry traders can procure agricultural produces at the most competitive price, without any counter party and quality risk.
   • To promote grading and standardization of agricultural produces and create a market, through which banks and money lending agencies can provide warehouse receipt financing to farmers and traders in a structured and risk free manner.  
4. Basic Features of the National Spot Market:  
   • The Spot Exchange has on line trading and clearing system with national reach, which can be accessed by the buyers from any location in the country to buy agricultural produce.
   • All commodities are traded on compulsory delivery basis, while the Exchange provides guaranteed delivery to the buyers and guaranteed payment to the sellers.
   • All contracts are spot contracts with single day duration. There is no future or forward contract traded on the Exchange.
   • There is a negotiable warehouse receipt system in place. Farmers bring their produce to the warehouse, where Exchange provides grading and quality certification facility. Based on the test reports, the Exchange issues warehouse receipts mentioning the quality, quantity/ weight of the produce delivered. Thereafter, such warehouse receipts can be traded on the Exchange platform electronically.
   • If a farmer wants to hold his material in Exchange designated warehouse, he can get loan from the bank against pledge of warehouse receipt.
   • Real time price and trade information dissemination. Farmer can take an informed decision about his selling price after taking into consideration price of the commodity prevailing at various locations.
   • Transparency in operations and decision-making, as the Exchange is neither the buyer nor seller of commodity; rather it is a facilitator between the producer and processor.    
5. Benefit to the farmers: National Spot Exchange aims at achieving the following for Indian farmers:           
   • To offer them the best price for their produce by enabling them to access a national level market.
   • To increase their bargaining power, as they will get a right to quote their own selling price, which is not possible in existing APMCs?
   • To increase their holding capacity by creating a mechanism for warehouse receipt financing by the banks.
   • To increase farmers realization by reducing cost of intermediation and connecting them to actual users directly.