Extra margin on castor seed futures justified: NCDEX

The National Commodity & Derivatives Exchange Ltd (NCDEX) said it had imposed an extra margin of five per cent on long and short sides on castor seed future contracts from November 5 due to these: Sudden spurt in spot and futures prices, substantial increase in daily traded volumes, open interest, which had touched an all-time high, and imbalance in member and client concentration. It said all these factors, in the lean season of the commodity, indicated excessive exuberance.

In a statement issued in response to this paper's report, Gujarat farmers ask FMC to ban castor seed futures, published on Thursday, the NCDEX said the margin was levied after analysing available trading data and to ensure that trading in relevant contracts was conducted in an orderly manner.

The report had quoted a representation made by the Bhartiya Kisan Sangh and did not carry the response from the Forward Markets Commission and the NCDEX. The non-inclusion of the response and other factual inaccuracies are regretted.