Fresh futures ban to cost bourses upto 60% of business

Fresh futures ban to cost bourses upto 60% of business
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First Published: Thu, May 08 2008. 05 08 PM IST
Updated: Thu, May 08 2008. 05 08 PM IST
PTI
New Delhi: The ban on four farm commodities -- chana, soya oil, potato and rubber -- is likely to cost the country’s commodity exchanges dearly with those focused on agri-related products expected to see their turnover slumping by upto 60 per cent, bourse officials and market experts said.
On a daily basis, about Rs 300-400 crore of business would be affected on NCDEX and NMCE alone, the two largest exchanges for trading of agri futures, the analysts said, adding that the ban would not only affect the turnover and volumes, but it would dampen the investors’ sentiments.
The ban on four commodities, announced late last night, could further dampen the growth prospects of the commodity business, which was already reeling under the impact of similar bans announced last year on wheat, rice and some pulses. The Budget proposal to introduce commodity transaction tax (CTT) has already hit the volumes, the analysts said.
“Of four banned items, chana, soya oil and potato are largely traded on NCDEX. This may bring down its turnover by 60 per cent. Rubber is traded on NMCE and its business would be affected by 30 per cent,” Forward Markets Commission (FMC) Chairman B C Khatua told PTI.
National Commodity and Derivative Exchange (NCDEX) Chief Executive Officer Ram Seshan vetted the impact of ban and said, “The business loss due to ban would not be more than 20 per cent on our bourse”.
The suspension of three highly traded items has put NCDEX under immense pressure which is fighting hard to improve its business on exchange.
“Any negative development will of course have adverse impact on the business. Volumes would obviously slip when some items are suspended from trading. However, the step taken by the government is incorrect,” Multi Commodity Exchange Managing Director Joseph Massey said.
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First Published: Thu, May 08 2008. 05 08 PM IST