Ace ties up with Kotak Mahindra Bank

Mumbai: In a first such initiative among commodity derivatives space, the Kotak Group-anchored Ace Derivatives and Commodity Exchange (Ace) has tied-up with Kotak Mahindra Bank for seamless financing for agri commodity traders.

Termed as "ComFin", the platform allows traders to avail funds from Kotak Mahindra Bank for financing to customers for taking delivery of agri commodities on the exchange platform.

Many large and small traders avail short term funds from informal sources even at two-three per cent higher interest rate. "ComFin will address the latent need of funding requirement, and will help market participants transact and take or deliver commodities on the exchange efficiently and seamlessly," said Dilip Bhatia, CEO of Ace. Those who hold commodities and need funding against these can benefit the ComFin. Also, traders who have taken position on the exchange either for future leverage or taking delivery can avail this benefit.

Many market participants holding commodities or intending to take delivery on exchange require short term funding against these commodities. While the funding facility is available, the process is not smooth.

ComFin platform will make finance available seamlessly for deliveries while bridging the gap of short term funding.

According to the tie-up, Kotak Mahindra Bank will provide the funding to eligible market participants for taking deliveries.

"The ComFin - the prompt financing system - will benefit those traders who want short term fund for paying out to customer with deliver intent. Those who wish to take delivery and falling short of fund for that, can avail fund from formal sources at the competitive interest rate. Traders can also pay the margin of say 25 per cent and take full exposure of 100 per cent on the bank with intention of delivery in future. Even spot traders can take benefit of this system," Bhatia added.

Currently, the facility is available for Ace traders only which can be expanded to other exchange depending upon the requirement in future, said Narayan S A, President, Commercial Banking, Kotak Mahindra Bank.

"Kotak Mahindra being a formal source of financing, traders can avail loan from the bank at standard interest rate. The lending rate however, may vary depending upon the ticket size, risk involved and the nature of commodity," said Narayan.

Talking on the occasion Ramesh Abhishek, Chairman, Forward Markets Commission (FMC), said, "The system will aid market participants to avail seamless financing and in the longer run help small traders and farmers to trade and deliver on the exchange platform."

Ace has recently completed one year of operation as a multi commodity, national exchange witnessing a tremendous growth with the current average daily traded value of more than Rs 600 crore.