Castor contract volumes jump at RCX post suspension by NCDEX

Daily turnover on regional exchange surges eight-fold to Rs 16 cr in two weeks, volumes rise six-fold to 5,310 tonnes

With castor contracts being suspended by National Commodity and Derivatives Exchange (NCDEX) for now, daily volumes of the commodity have moved up sharply on the regional Rajkot Commodity Exchange (RCX).

After NCDEX suspended castor contracts from January 27, volumes on RCX have increased to 5,310 tonnes from 920 tonnes in two weeks. What's more, in terms of value, the daily turnover of the exchange has moved up eight-fold, from Rs two crore to Rs 16 crore, during this period.

Currently, there are two exchanges that run castor seed contracts in India. but with NCDEX suspending the contracts, several traders or participants mainly from Gujarat resorted to trading at RCX, which resulted in volumes rising substantially.

 

"After NCDEX closed the castor seed contracts, RCX turned out to be the only destination for traders in India for the same and this resulted in increased volumes," said Bharat Vasa, vice president of RCX.

According to Vasa, RCX is known for castor contract across India since it is the only commodity being traded at the exchange.

NCDEX suspended futures trading in castor seed on January 27, in a bid to maintain market equilibrium, safeguard market integrity and in general interest.

It should be mentioned here that RCX is not an electronic platform and runs contract in traditional way. Trading method in regional commodity exchange is traditionally called 'ring'. It is an open space where sellers loudly offer their stocks and similarly buyers present in the ring area demand for the needed quantity they wish to buy.

"There are 101 registered members in RCX but only 12 are active. The exchange has about 300 registered non-members who are trading through registered members. Activity of non members has increased in recent times which also reflects on the increased volumes," said P B Pathak, executive director of RCX, adding that the only setback for the regional exchange has been that it does not run on an electronic platform.

The Securities and Exchange Board of India (Sebi) has asked regional exchange to go online and leave traditional trading method. However, RCX officials said that it is not viable for them to start electronic platform for only one commodity's contract.