The capital and commodity market regulator SEBI’s choice to scale back the eligibility restrict for launching choices on commodity futures will assist NCDEX introduce choices on spices, guarseed, castor and cotton seed oilcake (cocudakl).

SEBI has just lately mentioned a commodity with a mean month-to-month turnover of ₹100 crore on the futures market will likely be eligible for choices buying and selling. The restrict was decreased from ₹200 crore to assist alternate introduce choices on extra commodities.

The transfer is anticipated to enhance participation although the sentiment stays affected as a result of ban on futures buying and selling in 7 agriculture commodities for the final three years.

The Authorities suspended agricultural futures contracts on non-basmati paddy, wheat, chana, mustard seeds and its derivatives, soybean and its derivatives, crude palm oil and moong (inexperienced gram) in December 2021 for one yr and on evaluation prolonged it twice until this December regardless of trade plea in opposition to the ban.

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The choice disallowed the national-level commodity exchanges from launching any new futures contract on these commodities. Although not spelt out particularly, the overall opinion for suspending agricultural futures contracts was that it elevated spot worth volatility and meals worth inflation.

Ajay Kumar, Director, Kedia Commodities mentioned the launch of latest choices will certainly assist revive traders curiosity in agriculture commodities and enhance liquidity on NCDEX.

The SEBI choice to decrease the eligibility standards for choices buying and selling can result in NCDEX launching choices on spices, guar, castor and cocudakl, he added. Nevertheless, he mentioned the federal government ought to scale back the Commodity Transaction Tax to spice up traders participation and make it extra aggressive.

Buyers are switching their commerce from futures to choice as it’s more economical and offers greater leverage at a decrease price. The futures buying and selling volumes on NCDEX was down 8 per cent in April at ₹11,429 crore in opposition to ₹12,509 crore. The identical on MCX dipped 16 per cent to ₹3.5 lakh crore (₹4.13 lakh crore).

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Whereas NCDEX has no presence in choices buying and selling, the choices turnover on MCX was down 15 per cent to ₹22.10 lakh crore (₹26.15 lakh crore) and NSE registered 79 per cent improve in turnover at ₹68,614 crore (₹38,387 crore). At NSE, choices contract on WTI Crude alone contributed 98 per cent of the full turnover. NSE offers buying and selling in futures and choices on bullion, vitality and base metals.

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