FMC suspends futures trading in agri-commodities on Saturdays
FMC allows evening trade in globally-linked farm items on weekdays with effect from 1 April
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New Delhi: Forward Markets Commission (FMC) on Friday suspended futures trading in agri-commodities on Saturdays, and allowed evening trade in globally-linked farm items on weekdays with effect from 1 April. FMC has already discontinued futures trading in non-farm commodities on Saturdays from September 2013.
Currently on regular week days, bourses permit futures trading in farm items from 10 am to 5 pm while non-farm futures trading takes place from 10 am to 11:55 pm.
“Commission has decided that all commodities exchanges shall keep their trading platform closed on Saturdays for all futures contracts i.e. agricultural and non-agricultural with effect from 1st April 2014,” FMC said in a circular.
The FMC’s decision follows feedback from stakeholders.
They had said that the rationale for futures trading in farm commodities on Saturdays does not hold good because the global commodities futures markets are closed on that day and this would bring trading days at par with non-farm items.
They also suggested that suspending trade in all commodities on Saturdays would help exchanges and their members utilise the entire day exclusively for housekeeping, maintenance of record and and to attend compliance matter.
That apart, FMC has also decided to extend trade time for farm items till 11:55 pm in those commodities that take global reference for price movement in domestic exchanges.
The commission has extended trade time for agricultural commodities such as soya oil, crude palm oil, RBD palmolein, cotton, cotton seed oil cake, cotton seed, sugar and maize at national bourses, the separate circular said.
The time has been extended because at present domestic market participants are often unable to hedge adequately their price risk associated with international price movements in certain agri-commodities during evening hours.
“Any significant movement in the global market during this time leads to a significant gap on the domestic exchanges on the next day, thereby making hedge ineffective for trade participants. Hence, there is a need to align the domestic futures prices better with international price movements in the internationally linked agri-commodities,” FMC said.
FMC has asked the bourses to submit a compliance report in this regard by 15 April.
The FMC regulates 17 commodity exchanges in the country, of which six operate at the national level. PTI