NCDEX move to cut charges halted by FMC

The commodities markets regulator, the Forward Markets Commission (FMC), has once again stayed the National Commodity & Derivatives Exchange's (NCDEX) decision to slash transaction charges.

NCDEX, the country’s second largest commodity exchange, had issued a circular earlier in the day informing members about its decision to slash transaction charges by splitting the working hours between 10 am and 5 pm for agricultural commodity traders and from 5 pm to the end of the working day for non agro-commodities traders. The exchange reduced uniform transaction charges to Rs 3 per lakh of value of all trades in all commodities between 10-5 pm, while the same was cut to 5 paise per lakh of value of all trades after 5 pm till the end of trading.

FMC had last month stayed a similar move by NCDEX on the ground that the exchange has not taken its board and the regulator into confidence before implementing its decision. The reason for staying the NCDEX order this time round is also the same. “The FMC has stayed the circular. Therefore, uniform transaction charges will be levied for all participants across the trading day. The regulator is examining the matter and will take a final action in due course,” FMC Chairman B C Khatua said..

Ramalinga Ramaseshan, MD and CEO of the NCDEX, said, “We are not in a position to comment on the matter.” Madan Sabanavis, Chief Economist and Head - Knowledge Management, who is also the spokesperson of the exchange, also did not want to comment.

Sources familar with the developments said NCDEX has been trying to reduce the transaction charges following a steep erosion of over 50 per cent in its turnover since July this year. The transaction charge has been reduced much more for trading after 5 pm when its rival Multi Commodity Exchange (MCX) clocks most of its trading volume.

Interestingly, commodities like precious metals, base metals and energy are the three segments in which NCDEX manages very low turnover while the three global commodities are traded heavily on MCX.