You are here: Home » Markets » Commodities » Other Commodities
Business Standard

NCDEX might suspend members who violated trade norms

The exchange's initial findings into castor seed price manipulation started four days ago suggest some irregularities

Mumbai 

NCDEX might suspend its members on violation of trade norms

The National Commodity & Derivatives Exchange (NCDEX) might suspend registration of clients involved in manipulation of castor seed prices on its platform. Around half-a-dozen clients were involved in that.

The exchange's initial findings into castor seed price manipulation started four days ago suggest some irregularities and suspended trading in the commodity with approval from its board. Traders have been asked to withdraw their deposits of goods from the exchange-registered warehouses.

Trade sources feared involvement of some large traders and some unknown traders had started taking ‘short position’ without having adequate quantity underlying stock in warehouses.

“Especially in the past few days, it has been observed that the castor contract wasn’t functioning the way it should be. It had reached the extreme where we felt there is significant risk to market functioning and market integrity would be compromised. It also led to the conclusion that the transparent price discovery process was getting affected,” said an exchange official.

The official added the exchange had also started investigation in this regard. If found guilty, NCDEX would take harsh measures and recommend the regulator, Securities and Exchange Board of India, with stringent actions against the culprit including suspension of membership of such clients or members, he noted.

Apprehensions are that a large corporate house has taken huge position at a price significantly higher than the prevailing price of castor seed. Therefore, the corporate house wanted castor seed price to go up to recover its losses. But, a couple of other traders in similar fields played spoilsport by placing “short positions” orders.

“This does not give a perfect price discovery in the futures market, which NCDEX is meant for. So, we have decided to not let the trade use NCDEX platform for the corporate war elsewhere,” said the official.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, January 28 2016. 22:31 IST
RECOMMENDED FOR YOU
.