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Ace Derivatives and Commodities Exchange, promoted by the Kotak Group, has suspended launch of new contracts for February even as turnover on the exchange has been dropping in the last few months.
The decision to suspend the launch of new contracts follows a similar announcement for this month.
The exchange has deferred launch of new contracts in crude oil, cotton, chana, castorseed, refined soya oil, crude palm oil, refined palmolein and soyabean meal.
Of the eight commodities listed for trade on ACE Commodity Exchange, only two contracts of Cotton-118 expiring in February and March are active.
In response to a questionnaire from BusinessLine, a spokesperson of ACE, in a written response, said as a practice, exchanges get entire period contracts approved by the Forward Markets Commission.
These contracts are generally far-month contracts and are invariably illiquid in the initial months of its launch.
ACE has found it prudent to postpone the far-month contracts as it is working out a comprehensive strategy for gaining liquidity, he said.
Asked whether the exchange will have any contracts to trade if it postpones new launch in March, the spokesperson said there are Cotton-118 contracts up to July 2015 available for trading and hence, it would be not correct to state that there will be no contract after March.
This is the third commodity exchange facing problems within a year.
The Indian Commodity Exchange and Universal Commodity Exchange had suspended trading last year due to difficult market conditions.
Commodity transaction tax and a bearish trend in most commodities besides volatile currencies have aggravated the problems for commodity exchanges. A bullish equities market has compounded their problems, drawing away investors.
Interestingly, Kotak Bank had acquired 15 per cent stake in MCX for ₹459 crore.
Trading interest in ACE Commodity Exchange has dropped in last three months after the commodity market regulator Forward Markets Commission directed the exchange not to allow its group company Kotak Commodities to trade on the exchange platform.
The turnover on the exchange dipped to ₹106 crore between January 15 and 31 against ₹116 crore recorded in the preceding fortnight.
It logged a turnover of ₹11 crore and ₹12 crore on Monday and Tuesday.
In the fortnight ended January 15, the turnover on ACE Commodities slipped to ₹116 crore from ₹455 crore in preceding fortnight.
The turnover on NCDEX, which focuses trading on agriculture commodities such as ACE, was down at ₹37,918 crore (₹44,815 crore) while that of the NMCE was ₹1,869 crore (₹2,013 crore).
However, turnover on MCX was up seven per cent at ₹2,54,545 crore (₹2,37,359 crore).
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