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Commodity market regulator Forward Markets Commission is considering allowing re-launch of futures trading in urad, tur and rice. Future trading in these were banned in 2007 after prices soared, leading to surge in inflation.
Speaking to media on the sidelines of “The Pulses Conclave 2014” at Panjim in Goa, Ramesh Abhishek, Chairman of FMC, said that the commission is favourably considering NCDEX application to launch trading in urad, tur and rice.
“We have asked for some clarification on bajra contract specification, while other commodities would be granted permission (to start futures trading) in a month’s time,” he said. The exchange will also move the regulator to launch futures trading in new chilli variety and bajra.
The Commission has decided to allow pulses trading as it feels that the regulatory framework has improved since pulses trading was banned, leading to a better price discovery. Price volatility has also come down substantially, he said.
The Commission has taken various measures to boost market participation after turnover on commodity exchange fell sharply in the last few months. The levy of commodity transaction tax and the recent National Spot Exchange scam has affected investors’ sentiment, leading to lower turnover on exchanges.
The FMC has also moved a proposal with the Government to reconsider removal of commodity transaction tax on rubber, sugar and soya oil. It has also allowed exchanges to levy commodity-specific trading fee to boost volumes.
Reasoning the fall in turnover to volatility in commodity prices being lower, Abhishek said whenever there is less price volatility, the need to hedge risk becomes minimal for traders.
At the conclave, NCDEX signed a memorandum of understanding with India Pulses and Grain Association to work in collaboration for increasing effectiveness of trade tools including lifting of trade restrictions through continuous dialogue with regulator and policymakers.
Samir Shah, Managing Director, NCDEX, said besides educating stakeholders on research and crop survey, efforts would be taken to educate stakeholders about the benefits of the transparent online spot platform Nspot.
Most participants in the conference projected a bearish price trend on pulses with the country expected to reap a record harvest of 19.8 million tonnes (18.4 mt) this year.
Praveen Dongre, Chairman, India Pulses and Grains Association, said that the Government programme to boost pulses cultivation has paid rich dividends and now there is an urgent need to include pulses in the public distribution system to ensure nutrition supplement for the poor.
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