NEW DELHI, May 12: The Reserve Bank of India has given, in principle, approval to super star trading house, MMTC Ltd, for hedging of non-ferrous metals on the London Metal Exchange (LME).

MMTC has developed internal control systems with checks and balances for the purpose as suggested by the RBI. A report on these lines has been prepared by the company for consideration of its board which is due to meet shortly. Thereafter, it will go to RBI for its final nod.

This is for the first time the more than two-decade-old public sector trading giant is venturing in the field of hedging, designed to act as an insurance against possible losses due to price fluctuations on the LME.LME prices of, say, nickel and copper, move up and down so swiftly from hour to hour making it difficult for buyers to take quick decisions. Basically, hedging involves two types of operations: one physical (outside LME) and the other through LME. Any mismatch between the two can result in huge loses.Since the decanalisation of all non-ferrous metals in 1991-92 in the wake of reforms, MMTC has been importing these in competition with private parties to service the requirements of its customers. MMTC's 18 sales depots are spread all over the country.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.