FMC to review evening trade in agri commodities

The Forward Markets Commission (FMC) is set to review its decision to allow evening-session trade on commodity exchanges and consider whether this is keeping speculators away by allowing hedging provisions, or being misused. This is despite the fact that in its first month, evening-session trade on commodity exchanges has seen increased participation.

For Multi-Commodity Exchange, the volume of commodities traded in evening sessions is about 30 per cent of the volumes of its day-session agricultural commodity trade. For National Commodity & Derivatives Exchange (NCDEX), it is about 10 per cent.

FMC had allowed evening trade in 10 internationally traded agricultural commodities such as cotton, refined soya oil, crude palm oil and sugar, to bring about price parity. Earlier, these commodities were traded till 5 pm; but now, these can be traded till 11:30 pm so that the trading coincides with international trade.

The FMC would analyse whether the increased timings led to any speculative trading in the market, said a source.

  "Though a month is too short a time to review the full benefits of the night trade session, the level of interest and the participation has been encouraging. Now, Indian entities can access the market for globally-linked commodities across time zones and respond to the movement on international markets. Earlier, the Indian market would open only the next morning, with a significant gap," said Vijay Kumar, chief business officer, NCDEX.

Following the extension of trade sessions, most commodities have seen an increase in volumes. Refined soy oil gained the most, with total evening volume for the commodity in April at 35.5 per cent of the day trade on NCDEX.

For cotton, evening trade on MCX accounted for 54 per cent of the day's volume, while for sugar (NCDEX), it was 49 per cent.

Traditionally, evening trade has been allowed in metals and energy products, as these commodities don't offer scope for price manipulation.