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Leading commodity market participants feel that extending the trading time for agriculture futures to 9 pm may not necessarily boost volumes.
Market regulator SEBI recently advanced the opening of commodity futures trade to 9 am from 10 am and allowed all agriculture commodities to trade till 9 pm instead of closing at 5.30 pm.
Earlier, only agriculture commodities which are influenced by international price movements were allowed to trade till 9 pm.
Following the SEBI announcement, the Anil Ambani-owned Indian Commodity Exchange has extended agriculture commodity timing till 9 pm.
Sanjit Prasad, CEO, ICEX said extending trade timing for commodity derivatives is a progressive moveas it takes commodity exchanges a step closer towards convergence of the two asset-markets. Such reforms will help healthy development and deepening of the market, he added.
Incidentally, trading volume in kapas (cotton), soya oil and crude palm oil, which are traded up to 9 pm on agriculture commodity focused NCDEX is abysmally low after the first half of trading ends at 5 pm.
Integrate markets
Naveen Mathur, Director (Commodity and Currency), Anand Rathi said though the advancement of trade timing to 9 am will integrate commodity market with equity, volumes in agriculture commodities are unlikely to pick up post 5 pm with extension of trade timing.
Moreover, he said, most of the domestic spot markets ( mandis ) are closed by 4 pm and lack banking facility till 9 pm.Hedgers will not be able to bring in that extra margin if there are sudden price movements in agriculture commodity in the international market.
Ajay Kumar, Director, Kedia Commodities said the overall 12 hours of trading time for a shallow agriculture commodity futures market is ‘an overstretch’ when the most liquid equity markets trade only 6.30 hours. The regulator would do well to allow mutual funds and financial institutions to participate in commodity trading than extending agriculture trade timing, he added.
However, he said aligning commodity market with equity and unified broking for both asset classes is positive.
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