National Commodities and Derivatives Exchange (NCDEX) today said it has suspended futures trading in all running castor seed contracts to "safeguard market integrity and maintain equilibrium".
"We have suspended futures trading in all running castor seed contracts at close of business today under the provisions of the bye laws and regulations. The outstanding positions will be settled at the daily settlement price as at the end of day January 27," NCDEX said in a statement here.
The castor contract has been under the exchange's surveillance for some time now. In the past too, NCDEX took several regulatory measures in the interest of the market.
The exchange has taken this decision to "maintain market equilibrium, safeguard market integrity and in general interest of commodities market", the statement said.
The price discovery process was getting affected and with the new arrival season, any disturbance in efficient price discovery in these contracts could have had adverse impact on orderly functioning of the market, NCDEX said.
This also could have impacted thousands of farmers, it said, adding that some of the members were expressing difficulty in meeting their mark-to-market (MTM) margin obligations.
NCDEX had imposed additional margins of 5 per cent on both sides in view of increased volatility effective November 23 last year.
Since January 25, the exchange increased the Extreme Loss Margin from 1.5 per cent to 2 per cent and from 2 per cent to 2.5 per cent on January 27.
The exchange observed that despite these measures, the efficient price discovery process was getting affected and therefore decided to take necessary steps to protect market interest.
