India’s top two commodity exchanges, Multi-Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX), have imposed special margin on sugar futures in an attempt to curb volatility in prices of the sweetener at the futures market.
The measure has been taken on the direction of the commodity market regulator Forward Markets Commissions (FMC), sources said.
FMC was recently asked by the Committee of Secretaries (CoS) to watch the movement in sugar prices in the futures market and take necessary steps to curb excessive speculation.
According to an NCDEX circular, the exchange has imposed five per cent special margin on long positions of all running contracts of sugar except for contract those expiring in August 2009.
After the imposition, the total special margin levied on sugar will be 10 per cent on the long side on all contracts except for August, which will remain at 15 per cent. Similarly, MCX has fixed 10 per cent special margin on both M and S grades of sugar traded on the exchange, the MCX circular said.
Special margin is effective on both the exchanges from today. “Special margins are announced so that unnecessary volatility is curbed to maintain healthy price movement in the market,” an analyst with Hyderabad-based commodity brokerage Karvy Comtrade said.
Last week, the CoS reviewed sugar prices and decided not to ban futures trading in sweetener for the time being.
Sugar prices in the country have increased to Rs 27-28 per kg in retail markets from Rs 18-20 a kg last year.
