FMC reduces margins on jeera, pepper

Commodity market regulator the Forward Markets Commission (FMC) has directed all commodity exchanges to remove the special margin of 6 per cent levied on cumin seed (jeera) and pepper contracts from today.

Following the FMC's direction, all commodity exchanges, including the Multi Commodity Exchange (MCX), the National Commodities and Derivatives Exchange (NCDEX) and the National Multi Commodity Exchange (NMCE), revised their margins on pepper and cumin seed (jeera) contracts from the commencement of trade today. The latest circular supersedes an earlier directive issued by the FMC in July.

In another development, the NMCE announced a reduction in the validity period of warehouse receipts (WRs) of pepper contracts to six months, instead of the current nine months. This will be applicable to all stocks deposited as well as revalidated from October 16, 2007.

A WR will be initially issued with a validity of 90 days (3 months) at the time of deposit, which can be revalidated only once for another 90 days (3 months).

This would be subject to a standard deduction of 0.2 per cent at the of time revalidation. Thus, a seller will only be paid for only 998 kg instead of one tonne (1,000 kg) at the time of validation. Similarly, the buyer will have to pay for only 998 kg, instead of one tonne.

The exchange further clarified that only those WRs, which were valid at least till the twentieth of the delivery month (the contract maturity month), could be tendered on the exchange at the time of delivery settlement.