FMC reduces trading time of evening session by 2 hrs

De-lists four contracts from evening trade; no major impact on volume expected

Commodity derivatives markets regulator Forward Markets Commission (FMC) has reduced the trading time of the evening session in agricultural commodities by two hours and de-listed four contracts from the evening session owing to the lack of liquidity.

With this, the trading time of the evening session in agricultural commodities ends at 9:00 pm compared with 11:00 pm earlier in normal days. The closing time during US daylight saving period has been advanced to 9.30 pm from 11.35 pm earlier.

 

The regulator said in a statement to all running exchanges - Multi Commodity Exchange (MCX), National Commodity & Derivatives Exchange (NCDEX) and National Multi Commodity Exchange (NMCE): “On the basis of feedback received from the exchanges, it was felt that the objective of allowing evening trade can be fulfilled even if the trade timings are reduced.”

Trading will be allowed in commodities such as soya oil, soya meal, crude palm oil, cotton, kapas and sugar. Four commodities namely RBD (refined, bleached and iodised) palmolein, cottonseed, maize and cotton seed oilcake, however, have been discontinued due to the absence of trading interest.

 

The new timings will be effected from July 13. The FMC has asked exchanges to file compliance report by July 20.

P K Singhal, joint managing director of MCX, could not be reached for comments.

NCDEX managing director Samir Shah said: “There are multiple factors that can be attributed to the reduction in trade timings and removal of some commodities from the evening session. The commodities that were removed had less international linkage. We normally track co-relation of price with international exchanges. Those still left for trading have 80 per cent higher co-relations with their international counterpart.”

In India, the prices of globally referenceable commodities get reflected immediately in case trade is available. Hence, there is a need to have evening trade.

 

“Keeping it too late is a problem for physical market player in terms of trading hours. It was fatigue in terms of trading time. Providing trading window until 9 to 9.30 pm range gives traders enough opportunity to capture the international price without staying up to 11 to 11.30 pm. This is the objective the regulator perhaps want to achieve,” said Shah.

In case of major volatility, the price would get reflected the following day. The change in trading time will have no impact on volume of trade.