Securities and commodities market regulator SEBI has temporarily restrained the country’s largest edible oil producer Ruchi Soya Industries Ltd and a group company National Steel and Agro Industries Ltd from accessing the securities market. In an interim order that SEBI passed late Tuesday evening, the regulator found prima facie evidence of Ruchi Soya had formed a cartel to execute trades in the castor seed futures market in January 2016 to “corner/control the market on the long side in castor seed contracts.”

Lower circuits Recounting the case’s history, SEBI said that prices in castor seed February contract at NCDEX fell by around 20 per cent in January. “It was observed that futures prices of castor seed contracts touched lower circuit of four per cent on January 25 and hit lower circuit of six per cent on January 27. It was also noticed that there was a very high concentration of open interest in February 2016 castor seed contract.”

The exchange suspended trading in castor seed contracts on January 27 after this incident.

In March, SEBI passed an interim order banning four trading members and 12 of their clients (including Ruchi Global Ltd) from the securities market. With further investigations, SEBI found that “one client, namely Ruchi Soya Industries Ltd, (which was holding significant position in castor seed contracts) transferred funds of around ₹76.77 crore from January 1 to 27 to five clients who were also holding significant position in castor seed contracts.” SEBI found that these six entities held 39.39 per cent of total open interest in February 2016 castor seed contract, acquiring a dominant market share. Since this is an ex-parte order, the entities banned can file their objections to this order with SEBI.

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