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The aim is to widen the horizon of the commodity futures market and to bring agri commodities at par with non-agri ones in trading practices. FMC has notified 10 such commodities.
It has also directed that all exchanges under its purview be closed for trading on all Saturdays.
In another development, the regulator has directed ‘no trading’ on Saturdays. Exchanges have eebn told to send compliance reports by April 15. Traders have welcomed both decisions.
Traders are presently able to put through orders on the domestic futures platform only in the morning session. The agri commodities opened for evening trade by the new order are soya oil, soya meal, crude palm oil, RBD palmolein, cotton, kapas, cottonseed oilcake, cotton seed, sugar and maize.
“Domestic market participants are often unable to adequately hedge their price risk associated with international price movements in certain agri commodities during evening hours. Any significant movement in the international market during this time leads to a significant gap in the domestic exchanges on the next day, thereby making the hedge ineffective for the trade participants. Hence, there is a need to align domestic futures prices better with international price movements in internationally linked agri commodities,” said FMC on Friday.
“The Exchange will abide with Forward Market Commission’s directives regarding closure of trading on Saturdays. The change in trading hours for some agricultural commodity contracts on week days will be implemented,’’ said the spokes person of leading agri futures exchange NCDEX. Earlier, members of various exchanges had brought to the notice of the regulator the huge price difference between consecutive days in domestic exchanges because of global developments. In the absence of evening trading sessions, traders were unable to take positions.
“FMC has done a great favour to the commodities market by considering the request to also allow agri commodities in the evening session for commodities with international reference. This will help hedgers to do risk management as per international market price movements and traders/ investors will be able to take advantage of volatility in the evening session,” said Ashok Mittal, alternate president, Commodity Participants Association of India.
As for the other decision, futures trade in non-agri commodities on Saturdays were suspended in September 2013. Now, FMC has decided the exchanges will remain closed on all Saturdays, effective April 1. “Since, global markets remain closed, there is no reason for allowing futures trading on Saturdays in India as well. Full-day closure will help exchanges attend to compliance matters, etc,” the regulator said.
“Saturday-off is a welcome move by FMC. Tthe volumes were too thin and many a time, there was unexpected volatility on Saturdays. This will also allow members to utilise that time for other activities like housekeeping and compliance,” said Mittal.
Jayant Manglik, president, Religare Securities, said, “Both of FMC’s decisions are in the right direction. We favour either full open or full closed on Saturdays. The regulator opted for the second one. Also, aligning the domestic market through evening trade with the international market will help traders take their positions as per developments overseas.”
