 "FMC proposes evening trading in agri commodities")
The commodity futures market regulator is considering allowing evening trading in agri commodities. At present, non-agri commodities like metals, bullion and energy products are traded in the evening session. Since prices of all these commodities are linked to global markets, which are active all the time, these are allowed in globally-linked commodities' trading in the evening session on Indian bourses.
Evening trading in globally-linked agri commodities was allowed earlier, but was discontinued six-seven years ago. This, since it served little purpose for price hedging as hedgers were hardly active and evening trading promoted dubba trading or illegal trading in northern and western parts of India.
Ramesh Abhishek, chairman of the Forward Markets Commission (FMC), said the regulator had sought views of exchanges on allowing evening trading in globally-linked agri commodities. Soya bean and oil, crude palm oil, cotton and rubber are among globally-linked agri commodities traded on Indian bourses.
The idea behind evening trading has been that globally, most commodities are traded in the futures market round the clock and traders and hedgers should get a chance to respond to market volatilities after normal market hours in the Indian market. Hence, in commodities, such as gold-silver, metals and energy commodities, where India is not a price setter but a price taker, evening session trading was permitted in the early days of commodities futures.
FMC has also proposed discontinuing futures trading on Saturdays. In most exchanges, trading volumes on Saturdays are 50-70 per cent of other days.
Two executives on condition of anonymity said they did not support the idea of no trading in commodities futures on Saturdays.
Evening trading in globally-linked agri commodities was allowed earlier, but was discontinued six-seven years ago. This, since it served little purpose for price hedging as hedgers were hardly active and evening trading promoted dubba trading or illegal trading in northern and western parts of India.
Ramesh Abhishek, chairman of the Forward Markets Commission (FMC), said the regulator had sought views of exchanges on allowing evening trading in globally-linked agri commodities. Soya bean and oil, crude palm oil, cotton and rubber are among globally-linked agri commodities traded on Indian bourses.
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FMC has asked exchanges to point out globally-linked commodities in which evening trading could be permitted. A senior exchange official said perhaps only soybean and oil would qualify because rubber was mostly traded in Japan and palm oil in Malaysia and Indonesia, which are typically morning markets from the Indian perspective.
The idea behind evening trading has been that globally, most commodities are traded in the futures market round the clock and traders and hedgers should get a chance to respond to market volatilities after normal market hours in the Indian market. Hence, in commodities, such as gold-silver, metals and energy commodities, where India is not a price setter but a price taker, evening session trading was permitted in the early days of commodities futures.
FMC has also proposed discontinuing futures trading on Saturdays. In most exchanges, trading volumes on Saturdays are 50-70 per cent of other days.
Two executives on condition of anonymity said they did not support the idea of no trading in commodities futures on Saturdays.