Capital market regulator SEBI has suspended trading in all cotton futures contract on the country's largest commodity exchange MCX for one month to align the contract specifications with that of the market.

In a joint meeting of SEBI with the exchange and cotton value-chain participants, it was decided that the cotton contract specifications shall be revisited and modified in consultation with product advisory committee of the exchange.

Since the prevailing regulations do not permit changes in running contracts with open interest, January 2023 contract and subsequent contracts will temporarily not be available for trading till the revised contract specifications are finalised, which will be done in 30 days, said the exchange in a statement.

The contracts specifications will be revised in consultation with other stakeholders including members of the Textile Advisory Group, it added.

Market participants have been complaining that the volatile prices on MCX was much higher than the prevailing prices and sending bullish signal on the spot market.

Exchange surveillance mechanism will be strengthened further and closely monitored to prevent any kind of market abuse in the cotton contracts, said the exchange.

The exchange plans to expand the Cotton Product Advisory Committee to include more representation from value chain participants including textile industry.