The Multi Commodity Exchange of India on Tuesday granted institutional membership to the Bombay Bullion Association to facilitate the members of the latter at a nominal fee.

"The members of BBA will be offered admission under the auspices of BBA to trade on MCX at an admission cost of Rs 50,000, non-refundable, payable to BBA," Suresh Hundia, president of the 55 year old, 282 member strong bullion organisation said at a press conference.

MCX has till date managed to get about 115 individual trading members and BBA is the first institutional trading cum clearing member to be admitted.

MCX is in the process of tying up with various associations for roping them as TCM.

"BBA will be charged Rs 10 lakh (Rs 1 million) as an admission fee with an additional bank guarantee of Rs 10 lakh. This is the standard fee for becoming TCM on the exchange," Jignesh Shah, managing director, MCX said.

All the risk management criteria including margin norms will be applicable to the ITC members proportionately higher than the individual trading membership.

Trading-cum-clearing member means a person or corporate admitted by MCX as member, conferring upon them a right to trade and clear through the clearing house as a trading-cum-clearing member.

Moreover, the member may be allowed to make deals for himself as well as on behalf of his clients and clear and settle such deals only.

Initially, BBA will be allowed to trade only in gold and silver. However, under exchange rules, all members can trade in all the commodities, BBA will restrict its trading into two precious metals only.

MCX was reportedly open to an idea of extending or re-scheduling its trading hours beyond normal session times to synchronise with the TOCOM market of Tokyo and COMEX, the New York Mercantile Exchange division.

"We may offer 14 and a half hour of trading after a substantial liquidity and depth in the market is created," Shah said.

The lot size for gold would be one kilogram and 30 kilogram for silver. The BBA members will be charged Rs 30 per lot of gold and Rs 12 per lot of silver as transaction cost. Of this, MCX charges would be Rs 12 and Rs 5, respectively.

Gold bars supplied by London Bullion Market Association approved suppliers and Reserve Bank of India approved refineries in the country will be considered good deliveries.

The approved domestic refineries include Mumbai based RBI Mint, BBA Refinery, National Refinery Pvt Ltd, Mohan Modison Refinery and National India Bullion Refinery, Ahmedabad based Gujarat Refinery and Narandas Manordas Refinery and Delhi based MMTC Refinery.

MCX will have three bi-monthly contracts running concurrently, each expiring on the 15th day of the delivery month.

In case 15th of the contract month is a holiday the contracts will be settled on either the previous or the following working day.

MCX and BBA are yet to decide on a date to launch futures trading in gold and silver, the date will either be October 23, 25 or 30, either of the three.

"The connectivity between the BBA members will have to be put in place. Hence, the trading will be started on any of the above mentioned day," Hundia stated.