The Hindu Business Line : Traders' groups seek ban on commodity futures

The Centre has so far resisted all pressure including from within the Government to ban futures trading on grounds that the market is still nascent.

Mumbai , Sept. 18

Shortage of essential food products, rising prices and progressively imposed Government controls are all taking their toll on the commodity trading community.

Clearly, traders seem to be divided over the current market conditions that increasingly invite controls and restrictions.

Petitions

Several traders' groups have begun to petition the Union Government as also the Opposition leaders demanding a review of futures trading in essential commodities.

The Centre has so far resisted all pressure including from within the Government to ban futures trading on grounds that the market is still nascent, while the market regulator has taken a series of initiatives to contain volatility and speculation. But, clearly, policymakers are at their wit's end.

Pressure

Some groups of traders are determined to lobby harder and have approached powerful politicians.

They are urging fellow traders to bombard mails on the Government every day to mount pressure. One such chain of letters addressed to the Opposition leader, Mr L.K. Advani, to which Business Line had access, asserts that a small group of speculators is holding the entire market to ransom.

The representation has sought the intervention of the politician.

Instead of futures trading, physical traders are demanding delivery-based forward trading, a system that will considerably prevent large scale flow of speculative funds chasing commodities in genuine short supply.

Even during the consultative meeting of the regulator, Forward Markets Commission, and the national exchanges with representatives of trade associations held in Mumbai last month, some trade bodies were critical of futures trading especially in controlled commodities such as sugar.

However, several representatives of various commodity-based associations had welcomed the introduction of hedging facility and asserted that the price discovery and price risk management were necessary conditions for successful trading.

More Stories on : Trading | Commodity Exchanges | Politics

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