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SEBI may avoid London Metal Exchange for base metal price discovery

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LONDON (Scrap Register): The India’s commodity markets may be soon de-linked from London Metal Exchange (LME). For nearly two decades now, MCX, which has a monopoly in trading base metals, has been following LME prices for settlement of its metal futures contracts.

The Securities and Exchange Board of India (SEBI) is now mulling over making these contracts delivery-based and linking them to Indian base metal prices.

The change of stance in settlement, and entry of the National Stock Exchange and the BSE, may make trading in base metals highly competitive.

There is a view that domestic corporate houses and metals and mining traders will be able to play if contracts are linked to Indian metal prices. Also, the entire domestic trade could move to the exchange platform if contracts are made delivery-based.

The copper, lead, zinc and aluminium would attract many more corporate participants and other actual users looking to hedge themselves. Tata Steel, Vedanta and Hindalco are among the top global companies exporting from India.

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