Commodity futures trading to stay restricted till 5 pm

Our Bureau Mumbai | Updated on April 15, 2020 Published on April 15, 2020

Both the MCX and NCDEX have issued clarifications that the restriction till 5 pm on trading timing in commodity futures market will continue till further notice.

Commodity futures market in India was accustomed to trading from 10 am till midnight in India. But, the exchanges moved to curtail the trading hours till 5 pm when the Covid-19 lockdown was announced.

Brokers reasoned that since physical commodity markets were largely shut, there was no scope for hedging and keeping markets working till midnight would serve no purpose. Prominent brokers who run propriety desks or provide algorithm services, however, resisted the move and argued that timing should be kept as usual as the US markets opened for trading after 7 pm.

Even equity market participants had earlier demanded restrictions in trading hours but that was not considered by SEBI as equity markets trade only till 3.30 pm.

Sandeep Jain, Senior Vice-President, BME, told BusinessLine that derivatives trading on the commodity exchanges would not lead to any effective price discovery as long as the physical markets remain shut and extension of timing in the current situation would be an unnecessary burden. In India, there is delivery-based settlement in the commodity markets but delivery cannot take place since physical markets are shut.

On March 26, following an order from SEBI, commodity exchanges cut down the commodity derivatives market trading hours to 5 pm, against the earlier practice of midnight. This was after the Commodity Participants Association of India (CPAI) urged SEBI and the government to cut short trading hours as brokerages were facing trouble in keeping their operations running smoothly.

However, CPAI in April came under pressure from the broking community and requested SEBI to revert to the practice of trading till midnight. For a few days, brokers witnessed falling trading volumes. Also, trading volumes mainly pick up when the US markets open for trading. The cue for crude oil futures comes from the US.

Published on April 15, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.