The Hindu Business Line : NMCE imposes special margin on short positions; pepper trade upset

A MOVE by the Ahmedabad-based National Multi-commodity Exchange of India Ltd (NMCE) to impose 10 per cent special margin on all short position operators has led to an outcry from some section of the pepper trade.

They alleged that such "unilateral action" was with vested interest and it gave the impression that "such actions of the exchange give room to doubt the integrity of the people at the helm of the affairs".

The NMCE in pursuance of Clause 6.5 of Chapter 6 of Regulations of the Exchange and looking to the volatility in pepper contracts had decided to impose additional margin effective from July 27 on all client level short positions for August, September October, November, December and January delivery contracts. A slab rate has also been fixed.

According to some of the position holders the decline in spot market was limited to Re 1 a kg, while future deliveries have declined more than Rs 2 a kg every day since the start of the week.

As far as future market is concerned such decline or rise in comparison to spot will be always higher or lower.

It is an indication of future prices and, therefore, several factors such as carrying cost (storage and interest) as well as crop arrivals apart from fag end of the season availability of product both locally as well as imported influence future prices and which normally have higher fluctuation than ready/spot prices, they pointed out.

However, the order of NMCE also indicates exemption to the position holders who also have stocks with them.

Therefore, the short position holder may hesitate to declare their actual stock position.

When contacted for the reaction of India Pepper and Spice Trade Association (IPSTA), its President, Mr Kishor Shamji, told Business Line that the IPSTA board would study and discuss the NMCE order.

More Stories on : Commodity Exchanges | Spices & Condiments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
NMCE introduces evening trading

NMCE imposes special margin on short positions; pepper trade upset

Core group to focus on block rubber development

Mixed trend in rubber prices

Thottapally barrage to be closed

Poor monsoon boosts coal production

Apeda, Concor tie up for moving perishable goods

Time to review vegoil sector policies

Cardamom prices up on short supply