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Suresh P. Iyengar

Mumbai, Sept. 6 The Centre’s decision to extend the ban on futures trading in rubber, chana (chickpea), soya oil and potato up to November 30 is likely to affect investors’ confidence and may slow down the entry of new players into the sector.

The ban was imposed for four months on May 6 to arrest the soaring prices of these commodities.

Without assigning any reasons, Mr Anupam Mishra, Director, Forward Markets Commission (FMC), said futures trading in rubber, chana, soya oil and potato would remain suspended till November 30.

Mr Joseph Massey, Managing Director, MCX (Multi Commodity Exchange of India Ltd), said: “It is a setback. The Government move will send wrong signals to prospective investors waiting to enter the market. However, it will not have much impact trading interest in other commodities.”

Mr Kailash Gupta, Managing Director, NMCE (National Multi-Commodity Exchange), said it was going to be difficult to revive investor interest in these commodities when it is re-listed.

The ban on futures trading can never be used as a tool to bring down prices.

NMCE had the highest volume in rubber futures before it was delisted from trading.

Mr R. Ramaseshan, Managing Director, NCDEX (National Commodity and Derivatives Exchange Ltd), was not available for comment as he was travelling abroad.

Probably, the Government could have taken the decision due to political compulsions, said an analyst.

Terming the decision as a cautious move with the inflation hovering near its peak of 12.63 per cent, Mr Harish Galipalli, Head of Research, Karvy Commodities, said the prices would correct once the oilseeds and pulses arrivals start in October.

Exchanges led by NCDEX, MCX and NMCE have made presentations to the market regulator to prove that the suspension has not helped in bringing down the prices.

“Many committees have proved beyond doubt that futures do not have any impact on spot prices. On the other hand, it provides the much-needed price signal for the farmers who can take an informed decision,” Mr Massey said.

The Government decision comes at a time when the FMC Chairman, Mr B.C. Khatua, has advocated against the ban in many forums.

In fact, NCDEX had applied to the regulator for re-listing these commodities for trade once the deadline expires on Saturday.

The four commodities accounted about Rs 15,000 crore a month (Rs 500 crore daily) of the total volume, according to FMC data.

More Stories on : Commodity Exchanges | Commodities

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