Within 18 months of commencing operations, IT People-promoted Universal Commodity Exchange (UCX), India’s sixth nationwide commodity futures trading platform, has suspended trade in all commodities, with immediate effect.
With this, UCX became the second exchange to suspend futures trade in commodities. Early this year, MMTC-Indiabulls-promoted and Reliance Group-anchored Indian Commodities Exchange (ICEX) had suspended trade.
In a circular, UCX said, “Due to prevailing market conditions, it has been decided to suspend the trading activities of the exchange temporarily, subject to the approval of the regulator Forward Markets Commission (FMC) till the time a renewed plan is put in place.”
A UCX official said, “The FMC has approved the proposal to stop trading in all contracts where open interest is zero, with immediate effect. Also, all such contracts will be put on a square-off mode and trading thereon shall be suspended immediately, as soon as open interest becomes zero. No new contracts shall be approved for trading and no fresh contract will be launched without the approval of the FMC.”
Efforts to contact Ketan Seth, managing director of IT People, as well as Praveen Pillai, managing director and chief executive of UCX, remained unsuccessful.
In 2012, UCX began trade in 15 commodities, claiming it would offer different types of contracts to attract participation.
National Bank for Agriculture and Rural Development, Indian Farmers Fertiliser Cooperative Ltd, IDBI Bank, Rural Electrification Corporation Ltd and Commex Technology are major shareholders in UCX.
The UCX circular said the exchange would ‘de-hire’ all its warehouses with immediate effect. Members with stocks in any exchange-accredited warehouse were to lift the goods within 10 days from the issue of the circular, unless they wished to deliver against their open positions, failing which they had to bear the monthly commitment fees paid by the exchange to the warehouse concerned, it added.
“During the period under trading suspension, the exchange will draw up a fresh strategy, including without-limitation new segments and products in view of the prevailing market conditions,” said Jeyakumar A S, company secretary and chief compliance officer, UCX.
According to the FMC website, UCX’s turnover for June stood at Rs 2,152.25 crore.