FMC may discontinue evening trading on holidays

Aims to provide opportunities to traders certain globally traded commodities to manage risk to set tune with international market

The commodity markets regulator, Forward Markets Commission, might decide to order discontinuing of evening commodity trades on holidays. The reason is low participation and depressed volumes. An FMC source said, "We are considering it."

Commodity exchanges on public holidays don't trade in the morning but start at 5 pm — international commodities are traded till 11:30 pm. The reason has been to provide opportunities for traders in certain globally tracked commodities to manage the risk.

The average volume of evening trade during September on the Multi Commodity Exchange (MCX) was Rs 11,500 crore. On the National Commodities and Derivatives Exchange (NCDEX), it was Rs 366.85 crore. Commodities traded in the evening are bullion, metals, energy and internationally linked agricultural products such as sugar, soybean, refined soy oil, crude palm oil and cotton. Exchanges were allowed evening trade in agri commodities only this April. On the previous holiday, evening trade volume was Rs 9,950 crore on MCX and Rs 494 crore for NCDEX. Before evening trade was allowed for certain agri contracts, NCDEX would see very little trade in the evening on those days.

“It (the proposed step) might have an impact in case there is volatility on international markets. Then, it will become a huge gap for Indian prices to match up. But, it is also a good step, as the markets will entirely remain closed. There are days like Independence Day and Republic Day where the markets remain closed completely,” said Naveen Mathur, associate director, commodities and currencies, at Angel Broking.