Expressing unhappiness over the decision of the Securities and Exchange Board of India (SEBI) to extend the ban on futures trading in certain agri-commodities, including edible oils, for one more year till December 20, 2023, the Solvent Extractors’ Association of India (SEA) has requested the markets regulator to allow futures trading at least in internationally traded commodities such as crude palm oil (CPO) and crude soyabean oil.

In statement on Wednesday, Ajay Jhunjhunwala, President of SEA of India, said the extension of ban has not gone down well with its members as they had suffered massively due to high volatility in the markets.

“We were hopeful that the ban would be lifted and importers can breathe easy. However, this decision has put a dampener on the risk mitigation tool,” he said.

Not responsible for inflation

Stating that a healthy futures market is important for price risk management as well as the orderly development of agri markets, he said it also provides price signals to all stakeholders, including the government. Many studies conducted in the past have amply clarified that futures trading is not responsible for inflationary pressures, he said.

Trade and industry will be deprived of hedging and price discovery mechanism for smooth business operation and will be exposed to price volatility.

“Even the government would be deprived of price signals as the messenger (futures trading) would be dead,” he said.

SEBI suspended futures trading in seven agri commodities for one year last year due to high volatility in the market.

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