Sebi talks tough over commodity manipulation

The regulator has warned manipulators following complaints of unusual movement in prices of cumin, coriander and soybean

Just a month after taking over regulation of the commodity futures market, the Securities and Exchange Board of India (Sebi) has warned manipulators following complaints of unusual movement in prices of cumin, coriander and soybean.

"We will not spare manipulators and will take all steps for the healthy growth of the market," said a senior Sebi official. Regulations have changed significantly under Sebi and its warning that manipulators will not be spared carries weight.

In the last few weeks, Sebi has received several complaints of market manipulation in coriander (dhania), soybean, cumin (jeera) and chana. From the middle of September a bull run in these commodities led to a spurt in prices followed by a fall.

Soybean prices went up 20 per cent and fell seven per cent from their peak, jeera went up seven per cent in 15 days after Sebi took over the Forwards Market Commission and then fell six per cent, coriander went up nine per cent in 15 days and fell 25 per cent subsequently.

Sebi has sought information from the National Commodities and Derivatives Exchange (NCDEX) where these commodities are traded.

"The exchange has always had a strong and effective surveillance mechanism. It does not hesitate to take immediate action within its power to deter malpractice," an NCDEX spokesperson said.

In a recent meeting with commodity participants in Delhi, Sebi whole-time member Rajeev Agarwal, who is in charge of commodity derivatives, had said, "Sebi will not tolerate any manipulation and will be very tough with manipulators."

"Sebi's warning matters now because it has direct powers to ban manipulators and impose penalties. Sebi can also recover gains made from manipulation," an executive with an exchange said.

Sebi's surveillance is also robust. It generates 100-odd alerts a day in equities for possible investigation. The same system generates alerts for commodities as well.

Agarwal was earlier with the FMC, where he investigated manipulation. At Sebi, he banned hundreds of participants and companies for using the market platform for money laundering.