SEBI bans derivatives exchange in 7 agri commodities

SEBI bans derivatives exchange in 7 agri commodities

by admin- Tuesday, December 21st, 2021 08:02:20 AM

Move visible as a degree to rein in inflation
Capital and commodity markets regulator Securities and Exchange Board of India (SEBI) has suspended futures and alternatives buying and selling for twelve months in a bunch of agricultural commodities consisting of chana, mustardseed, crude palm oil, moong, paddy (Basmati), wheat and soyabean and its derivatives.

The suspension of buying and selling in those commodities came into effect on Monday following a conversation from the Department of Economic Affairs.
The move comes at the heels of challenge over rising inflation — wholesale inflation rose to a record 14.23 according to cent in November. The cutting-edge suspension will unsettle the complete commodity derivatives ecosystem together with that of broking firms in an effort to now be left simplest with steel and power contracts to alternate.

Following the suspension, the MCX banned sparkling positions in crude palm oil and allowed best squaring-off in December contracts. Crude palm oil futures turnover at the MCX had fallen 34 consistent with cent ultimate month to ₹five,168 crore in opposition to ₹7,888 crore registered in October. India is the largest importer of fit to be eaten oils with palm oil accounting for 2-thirds of imports.

NCDEX also said no sparkling positions (including intra-day) may be allowed in futures and alternatives contracts of wheat, chana, rapeseed/mustardseed, soyabean, subtle soya oil, soyameal, crude palm oil, moong and NCDEX Soydex indexed at the change from Monday.

Only squaring of existing positions can be allowed and no new futures and options contracts may be launched until similarly be aware in any of those commodities, it brought.

The blended common every day turnover of soya oil, soyabean, rapeseed and chana at the NCDEX changed into ₹12,seven-hundred crore so far in 2021, per the alternate data.

While soyabean expenses in the spot market fell 3.Five consistent with cent after suspension of buying and selling within the derivatives segment, marketplace experts feel that the freeze on futures will not remedy the meals inflation problem.

Revisiting the past
The commodity derivatives market has been at risk of such surprising suspensions of buying and selling in agriculture objects ever because it turned into delivered underneath the erstwhile Forward Markets Commission (FMC).

Many commodities relisted for buying and selling after the ban never attracted investor interest and exchanges could not succeed in getting the specified liquidity in these contracts.

Interestingly, SEBI’s selection comes days after it came out with a session paper to allow foreign entities to exchange in commodity derivatives and promote the ‘one alternate one commodity’ concept.

Narinder Wadhwa, President, Commodities Participants Association of India, stated the rural commodities market has been disenchanted with this ban and best slender commodities are left for trading. “We have expressed our worries to the Ministry. Market individuals are dropping religion and have misplaced heavily due to these bans. It might be very hard to convey back those institutional gamers and FPOs (farmers and producer enterprises),” he stated.

Ajay Kumar, Director, Kedia Commodities, stated commodity derivatives have been just giving alerts on approaching call for and deliver mismatch and suspension of trading is akin to taking pictures the messenger for the horrific news, he said.

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