NCDEX defers revision in risk management fee after strong protest by mandis

New fee structure would hurt traders with long-term positions; Mandis across Gujarat and Rajasthan had halted spot commodity trading in protest, leaving thousands of farmers stranded

The National Commodity Clearing Ltd (NCCL), the clearing corporation of the National Commodity and Derivatives Exchange Ltd (NCDEX), has kept its recent revision in risk management and clearing fees in abeyance.

NCCL had, through a circular dated December 18, revised its risk management and clearing fees to Rs 10 for every million worth of business generated on its platform from the existing Rs 40 per million. While the change in fee structure was profitable for short-term position holders, it was negative for long-term position holders. The change in fee was proposed to be made effective from February 1, 2019.

With a one-time fee of Rs 40 for every Rs one million of transaction value, traders could maintain their positions (open interests) for as long as a month. The revised fee, however, levies Rs 10 per Rs one million of transaction value, translating in Rs 300 a month for Rs one million worth of turnover, irrespective of the time for which the position was held. The revision, however, was greeted with protests by dozens of mandis in Gujarat and Rajasthan, which halted spot commodity trading, leaving thousands of farmers stranded.

“NCCL has received varying feedback on the proposed changes to its risk management/clearing fee structure announced recently. The set-up continues to obtain inputs and examines them in the context of the varying usage of our services by members and their clients, both in terms of cost and value delivered. Till a final decision is arrived at, the circular proposing change in risk management and clearing fees will be kept in abeyance,” said Rajiv Relhan, Management Director and Chief Executive Officer, NCCL.