 "NCDEX suspends futures trading in castor seed")
The National Commodities and Derivatives Exchange (NCDEX) has suspended futures trading in all running castor seed contracts with immediate effect. The outstanding positions will be settled at the daily settlement price at closing on January 27, the exchange said in a release.
Sources close to the development said the NCDEX board on Wednesday approved the suspension of castor seed futures.
The exchange said it took this decision to safeguard the interest of the commodities market. However, sources said some players were trying to break market equilibrium by building speculative positions.
Ajay Kedia, director, Kedia commodities, said: “Last week, Sebi (Securities and Exchange Board of India) put restrictions on agri forwards and now NCDEX suspended castor futures. This will spoil sentiment again for agri futures trading.”
The launch of more futures contracts in Castor seed will be communicated at a later date, said the NCDEX release.
According to exchange sources, some of the members were expressing difficulty in meeting their mark-to-market obligations. In an explanatory note, the exchange said: ‘The price discovery process was getting affected and with the new arrival season, any disturbance in efficient price discovery in these contracts could have had adverse impact on orderly functioning of the market. This also could have impacted thousands of farmers.”
The castor contract has been under the exchange’s surveillance for some time now. In the past as well, the exchange had taken several regulatory measures in the interest of the market. Effective November 23, 2015, it imposed additional margins of five per cent on both sides in view of increased volatility. From January 25, the exchange increased the extreme loss Margin from 1.5 per cent to two per cent and from two per cent to 2.5 per cent on January 27, 2016.
Sources close to the development said the NCDEX board on Wednesday approved the suspension of castor seed futures.
The exchange said it took this decision to safeguard the interest of the commodities market. However, sources said some players were trying to break market equilibrium by building speculative positions.
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NCDEX had in the past tried to control this by up to 100 per cent margin, but with speculators tightening their grip, the exchange was forced to suspend trading.
Ajay Kedia, director, Kedia commodities, said: “Last week, Sebi (Securities and Exchange Board of India) put restrictions on agri forwards and now NCDEX suspended castor futures. This will spoil sentiment again for agri futures trading.”
The launch of more futures contracts in Castor seed will be communicated at a later date, said the NCDEX release.
According to exchange sources, some of the members were expressing difficulty in meeting their mark-to-market obligations. In an explanatory note, the exchange said: ‘The price discovery process was getting affected and with the new arrival season, any disturbance in efficient price discovery in these contracts could have had adverse impact on orderly functioning of the market. This also could have impacted thousands of farmers.”
The castor contract has been under the exchange’s surveillance for some time now. In the past as well, the exchange had taken several regulatory measures in the interest of the market. Effective November 23, 2015, it imposed additional margins of five per cent on both sides in view of increased volatility. From January 25, the exchange increased the extreme loss Margin from 1.5 per cent to two per cent and from two per cent to 2.5 per cent on January 27, 2016.
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