Licence move won't check speculation: Rubber traders

The high volatility in domestic futures trading, which is affecting spot trading, has prompted the Rubber Board to issue a communiqué making licence for taking physical delivery of natural rubber mandatory for the dealer.

And in line with this, the National Commodity and Derivatives Exchange has advised all trading and clearing members to ask their clients to obtain the licence as required under the Rubber Act, 1947.

However, the mandate would not be able to stymie speculative trading in the futures market, leading dealers said, asking "why is the board restricting the licence only to physical delivery?"

A leading rubber broker in the city too expressed the same view. "This won't have any impact on the market and won't be able to improve the situation in a highly volatile rubber trading," he said.

N Radhakrishan, vice-president, Indian Rubber Dealers Federation, said dealers had made representation to the commerce ministry to make licence compulsory for futures trading, irrespective of taking delivery or not. The partial implementation of the Act would not benefit anybody "� growers or genuine dealers' he added.

The Rubber Act of 1947 states: "No person shall sell or otherwise dispose of, and no person shall buy or otherwise acquire rubber except under and in accordance with the terms of a general or special licence issued by the Board."

Radhakrishan said, as per the Act of 1947, it is very clear that for all types of trading licence has to be obtained. As NR is a controlled commodity under the Act, the licence system cannot be confined only to a section of trading, he added. "Trade cannot differentiate between delivery deals and non-delivery deals. Whenever a deal is taking place it is meant for taking delivery, whether on spot or on a later date. So all the deals should be brought under the license raj," Radhakrishan said.

Traders and growers attributed the high degree of volatility in rubber trading to thoroughly planned speculative trading and price manipulation. "Spot prices are predominantly under the control of futures trading, and instead of price discovery speculative trading spoils the market," a dealer said.

But the board sources clarified it "was a misinformation that licence is not required for contract trading. It is not so, licence is mandatory for all dealings of NR".

Meanwhile, RSS-4 was quoting at Rs 100 a kg, today. The benchmark grade had earlier dipped to Rs 98 after witnessing a peak of Rs 101 in an off-season market.

The market stock increased by around 70,000 tonne to 1,72,000 tonne by the end of January. Traders said bulk of the stock was with the exchanges. Rubber Board sources said the piling up was owing to growth in imports during the past three-four months. Imports touched 53,841 tonne as on February 5.