MUMBAI (Commodity Online): India-based electronic spot commodity trading bourse, National Spot Exchange Limited (NSEL) is mulling to tap retail segment of gold investors by launching demat gold investment product on its platform on Wednesday, March 17, 2010.

The segment, which on lines of cash segment in equities, offers commodities in the demat form in smaller denominations like one gm, two gms, three gms etc.

Most of the retail investors either purchase stocks using their demat account or purchase units of mutual funds. In India, the time-honored ancestral wisdom places a high premium on buying precious metals as investment and every household in India invests in gold / silver in different forms. Thus, the potential for demat accounts in commodities is at least 4-5 crores over a period of next 3 years. This is a great business opportunity for large number of DPs and retail broking houses, said Anjani Sinha, MD & CEO, NSEL.

The spot exchange expects it to be a big hit among the retail investors, who have waited long for such type of investment product in commodities. On the first day of its launch, the contract recorded a unit volume of 43,438, valued at Rs 7.40 crores, the exchange stated in a statement issued today.

The exchange has joined hands with all leading participants of the equity market to create depository participants thereby reaching out to the retail investors.

An individual can trade in this investment product after opening a demat account with any of these DPs. Physical delivery of gold is possible in the form of gold bars / coins from Ahmadabad, Mumbai and Delhi. NSEL is in the process of expanding its delivery facilities to other locations.