Commex trades: Daily price limit raised for non-agri futures

The Securities and Exchange Board of India (Sebi) has expanded the scope for trading in non-agricultural commodities by raising the daily price limit (DPL) for these. This and other changes take effect from September 29.

A circular it issued on Wednesday said the DPL had been fixed at six per cent in two slabs for steel and a total of nine per cent for gold, at three per cent each in three slabs. For other non-agri commodities, too, it is nine per cent, with four per cent as the initial slab, with a first enhanced slab of two per cent and then three per cent.

According to trade sources, the DPL for all non-agri commodities were fixed by the erstwhile regulator, the Forward Markets Commission, at a four per cent initial slab and two per cent each for the next two enhanced slabs, aggregative at eight per cent.

Sebi also introduced a cooling-off period of 15 minutes. There was no such period earlier. Once the trade hits the prescribed initial slab, the DPL shall be relaxed further by the first enhanced slab, without any cooling-off period in the trading. If the enhanced slab is also breached, then after a cooling-off period of 15 minutes, the DPL shall be further relaxed by the second enhanced slab'. During such periods, trading shall continue to be permitted within the previous DPL slab. If price movement in the related international market is more than the aggregate DPL, this may be further relaxed in steps of three per cent by the exchanges, which must immediately inform the Integrated Surveillance Department of Sebi, with details and justification.

In another circular, Sebi has empowered commodity exchanges to levy different transaction charges for different commodity contracts and even in the case of contracts of the same commodity. But, the exchanges will ensure the ratio between highest to lowest transaction charges in the turnover slab of any contract is not more than 1.5:1. In the slab system, the concessional transactional charges shall be only on the incremental volume/ turnover and not on the entire lot. The transaction charges are to be charged after the trades are put through.

Exchanges must ensure the change in transaction charges do not affect the existing risk management system. Also, that it does not favour selective trades or a select category of investors, beside discouraging artificial demand.

Also, Sebi has levied a 0.5-1 per cent penalty on members of commodity exchanges on short or non-collection of initial margins, effective from the trading day. All instances of non-reporting of margin collection would result in 100 per cent of non-collection. The penalty levied on these would be collected by the exchange within five days of the month end.

For those defaulting three times or more during a month, the penalty would be five per cent of the shortfall. This would be deposited in the exchange's investor protection fund.

Sebi has advised regional commodity derivatives exchanges to set up a Due Date Rate committee, with half from outside the trading members' purview. The panel would decide the names of at least 15 entities/persons of various trade interests for forming a spot price polling panel. At least a fifth of panelists will be changed every year.