Commodities market regulator Forward Markets Commission (FMC) is understood to have launched a probe into an alleged market manipulation of pepper futures contracts by certain market participants in collusion with some exchange officials.
According to sources, certain large operating cartels who were earlier involved in guar scam are behind the unnatural price rise in pepper futures since June, Cochin Hill Produce Merchants' Association (CHPMA) sources said.
These operators allegedly with insider information picked up about 6,000 tonnes of pepper from the exchange platform, hoping to make a “killing by squeezing genuine hedgers/small investors”, a CHPMA source said.
Since it is against the existing restrictions, the FMC is probing as to how “one or two entities could manage to cover/corner such large quantities with in such a short time. “There are restrictions on the exchange platform with regard to near month positions where in no one individual party is allowed to hold more than 300 tonnes outstanding position for the near month,” the source said.
The Assocham has also appealed to the FMC to probe the unusual price movements in pepper since June 2012. The exchange, in a statement some time ago, stated that they had a robust mechanism in place to take care of any quality issue that may arise. Therefore, the present allegations regarding quality are appear to be instigated.
The trade, however, expressed the fear that FMC might ban futures trading in pepper in the wake of the present happenings.