New settlement to spur volatility in chana, urad contracts

National Commodity and Derivatives Exchange (Ncdex) on Thursday changed the settlement terms for chana and urad with immediate effect.

Trade of these commodities will now be settled on the basis of the average of trading prices of the last five days instead of last day's settlement price.

The move has angered traders. Market sources said traders, who have taken a long position, would make huge losses on account of the change in the settlement terms. However, traders of short position would benefit.

"What prompted Ncdex to make such changes, particularly when contracts are all set to become mature within 48 hours?" an exchange member asked. Ncdex executives could not be reached for their comments.

Barely half an hour after the announcement on Thursday, prices of both urad and chana declined by more than Rs 50 a quintal. However, the prices closed the day at Rs 2,901 a quintal and Rs 2,029 a quintal, with losses at lower levels of Rs 44 and Rs 31, respectively.

"Forward Market Commission (FMC) "" and any commodity exchange "" can change terms, and rules and regulations as per their convenience before the launch of a contract, but once the contract is launched, they can change only margins, said an angry Jalgaon trader.

The regulator and the exchanges have the power to suspend the trade, but they cannot change terms in the middle of settlement, he added.

A Jalgaon-based pulses trader Pradeep Jindal, of Jindal International, said, "We are meeting FMC chairman tomorrow, and if the matter is not resolved, we are ready to move the court."