Ahmedabad: Twelve members of the Jeera Product Committee of the National Commodity and Derivatives Exchange (NCDEX) on Friday resigned from their posts alleging that the exchange was not functioning in the interests of the farmers and investors.
In their resignation letter, addressed to the chairman of NCDEX, the members said their suggestions and recommendations had been ignored by the exchange time and again.
NCDEX denied the allegations. “We have been doing exactly what the committee has been advising us,” said Narendra Gupta, a senior executive of the exchange. It was only on the committee’s advice that the exchange revised quality specifications for jeera recently, Gupta said.
But the vice-president of Unjha Futures Commodities Association, Arvind Patel, said: “If he was indeed listening to what we said, what is the reason for 12 members to resign en masse? We have been trying to speak to him for over two-and-a-half years without success.”
Jeera is the only product where maximum delivery of goods takes place. The members allege that NCDEX does not have the necessary infrastructure to handle such deliveries and it seems that it was not interested in setting up necessary infrastructure as it wanted to operate purely on speculative basis.
They alleged that delivery of goods is not accepted by the agencies appointed by the exchange when the prices reach the peak and goods are rejected randomly without any proper reasoning. They said at times jeera product members had given samples to the exchange authorities in the presence of members of the Forward Markets Commission (FMC) and the quality of the goods was found to be excellent, but they were still rejected by the exchange.
“Eighty per cent of the goods fail tests when delivery is taken by clients and no steps are taken by the exchange in this regard,” the letter said. Patel said that Unjha, a jeera hub in Gujarat, normally trades 5,000 to 6,000 sacks of jeera every day, but NCDEX has not been taking much of the delivery since 2005 when it began operations in Unjha.
The charge was rejected by Gupta. “Our quality checks have to be fairly strict. For every trade for which delivery is to be taken, we have an assessor and it is his responsibility to measure by standard statistical system of sampling, physical and chemical testing to certify that jeera meets specifications and only then delivery is done. There have been some issues with the quality of jeera this season as it has developed black spots due to the humid weather and so it might have upset some of the members,” he said.
He denied that NCDEX did not take deliveries. “We do in a good amount. We trade in over 50,000 to 60,000 tonnes of agri goods and we do have good amount of jeera in the warehouses of Jodhpur and Unjha,” Gupta said.
It is not just the quality and delivery that the jeera product committee members are complaining about. They allege that the exchange is “functioning on the advice of some speculators and insider trading seems to be evident.”
The members in the letter said that when the contract price was Rs151.60, the spot price was Rs131.40 and when the contract price was Rs111.50, the spot price was Rs127.60. “It clearly suggests that against a decline of Rs40 per kg in the contract, the spot price has declined only by Rs4 per kg. This clearly indicates that the exchange is functioning on price rigging,” the letter reads.
Gupta said he was not aware of such incidents on the exchange. “It is the most transparent system,” he said adding that there would be some correlation between spot and future prices and the price increase in the futures market may be lower or higher depending on technical or other reasons.
“For example the buyers may perceive that with poor jeera crop and high demand, the price in the future may be much higher and so they may quote a higher price in the futures market compared to spot. One needs to look at it closely before commenting,” he said.