NCDEX cuts position limits in gold futures

National Commodities and Derivatives Exchange (NCDEX), which is trying to step up volume in bullion trading, has reduced the open position limits in gold futures for both brokers and individual traders by over 66 per cent to six tonnes and two tonnes, respectively.

Earlier on the NCDEX platform, large brokers had exposure in gold up to 18 tonnes including all gold contracts, which has now been reduced to six tonnes or 15 per cent of open interest, the NCDEX circular said.

For small traders, open position limit has been revised from six tonnes to two tonnes including all gold contracts or 15 per cent of open interest (outstanding contracts), it said.

The revised limits are effective from March 24 on all gold variants -- Gold 1 kg, Gold International and Gold 100 grams, the NCDEX said, adding that the exchange has made changes as per the directives received from the market regulator Forward Markets Commission (FMC).

Any new variants of gold contracts will also be included for calculation of said limits, it noted.

Bullion experts, however, said that the NCDEX move may fail to encourage brokers and small traders as they will have less exposure to gold now.

Gold volumes on the NCDEX stood at 6,755 tonnes in the second fortnight of February, while on the MCX, its competitor, volumes soared to 8.18 lakh tonnes.