FMC timings move to 'spawn transparency'

National Multi Commodity Exchange of India, National Commodity and Derivatives Exchange and Multi Commodity Exchange of India would implement FMC's new directive starting Monday, they said.

National Board of Trade, Indore would continue with the ongoing system of ending trading in the soy complex at 1600 IST, said A.S. Jeyakumar, executive director at NBOT.

The FMC directive is a confidence building measure and would boost futures trading in commodities as the markets are likely to become more transparent, traders and analysts opined.

"Traders will change their attitude and warm up to the idea of trading only in the morning session," said Alex Mathews, head of research at Geojit Financial Services.

India has a vibrant agricultural commodities market and prices here should not follow international markets, Mathews added.

"In the current system, traders are used to a longer spread over two sessions. Initially, both volumes and volatility in prices would increase for a couple of weeks," said Hitesh Sayta, a trader with city-based Shri Enterprises.

However, Bhanuji Haldea, a Jaipur-based trader with Ridhi Sidhi Commodities had a divergent view.

"Volumes will actually fall initially because traders are used to trading in the second session. After the first one or two weeks, traders' mindset will change and then volumes are likely to come back to normal," Haldea said.

"Trading in soy complex should have been allowed to continue after 1700 IST because it closely follows prices on Chicago Board of Trade," said Sandeep Bajoria, chief executive officer, Sunvin Group.

Trading on Chicago Board of Trade commences at 2000 IST and continues till midnight as per Indian time, Bajoria added.

"Inclusion of palm oil will not affect trade because it follows the Malaysian markets (Bursa Malaysia Bhd), which close before 1700 IST," Bajoria said.

However, according to officials at both NCDEX and MCX, it would be difficult to gauge the impact on volumes till the directive is implemented on Monday.

"Futures trading will continue till 2355 IST in all commodities that are primarily affected by international prices," said Joseph Massey, business development officer, MCX.

However, trading in oilseeds, being agricultural commodities, would end at the stipulated time by the FMC of 1700 IST, Massey added.

"Trading in all agri-commodities will stop at 1700 IST. Trading in bullion, metals and crude oil will continue till 2355," said Madan Sabnavis, chief economist and head of knowledge management, NCDEX.

"The FMC time limit order is a welcome move as most the transactions will be dealt during the time when banks are operating. This will help in easier settlement of position limits and margin calls," said Paul Chakalayil, chief executive officer, Kochi-based First Commodity Exchange.

"Artificial jacking up of prices by certain sections of traders in the evening session would be curbed now. Serious players would remain in the market. In fact, we might even see new entrants because of reduced insecurity about price manipulation," Kailash Gupta, managing director, NMCE.

The FMC directive on limiting trading time on agri-commodities was issued Wednesday.

The FMC had also ordered exchanges to apply a uniform transaction charge on all commodities. NCDEX, from Thursday, unified the transaction charges for all commodities being traded on it.

With respect to unified transaction charges for all commodities, MCX's Massey said, "MCX has a uniform transaction charge across all commodities. However, its computation differs according to slabs and not commodities, which is permitted by the FMC."