NCDEX, MCX to launch castor seed futures on Thursday

After a year, castor seed futures are back for trading on an exchange platform. With permission from the Securities and Exchange Board of India (Sebi), the National Commodity and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange (MCX) are launching these from Thursday, with the first contract expiring in February, followed by March, April and May 2017.

When NCDEX suspended the trade last January, it was the only major one in the segment. This time, MCX is doing so, too, with with much lower transaction charges. NCDEX has fixed a flat Rs 2 per Rs 1 lakh of trade; most contract specifications are as these earlier were. MCX's transaction charge will be 50p per Rs 1 lakh of trade value.

When NCDEX suspended the trade, it said this was to protect the integrity of the market. It suspended castor seed contracts expiring in February 2016 and beyond, suspecting manipulation and concentration of trades. Sebi asked an explanation and in a March interim order, barred 16 entities, including four trading members and their defaulting clients, from accessing the markets for suspected fraudulent and unfair trade practices. The order was later strengthened. The episode also resulted in several regulatory measures in agricultural commodity trade.

Samir Shah, managing director of NCDEX, said: “We have significantly strengthened the risk management framework.”

Sebi has specified that quality of the commodity should match those prescribed by the Bureau of Indian Standards, Food Safety and Standards Authority and Agmark.