Traders seek nod for evening trade in globally-linked commodities
TRADERS and commodity exchanges have asked the market regulator, Forward Market Commission, to allow evening trading in internationally linked agri commodities like edible oil complex. "With increased participation in edible oil and oilseed complex by the industry, the timing is right to introduce evening trading in commodities that take price signals from the international markets," NCDEX chief business officer Shrikant Subbarayan told ET. This will also help in restricting the parallel trade that takes place once the domestic market get closed, he added. Sources said the size of such parallel trade is more than the size of combined turnover of all the three exchanges and introduction of evening trade will provide a legal alternative and will increase participation of industry. Currently, evening trading is allowed in coffee but there are several other commodities, like edible oil complex, sugar, cotton and maize, where the industry feels that evening trading should be introduced. FMC member Kewal Ram said that in principle, the regulator is not against opening the agri commodities for evening trade but it is waiting for the right time when these commodities can be globally integrated. "We had started evening trade in some agri commodities but there were complaints from traders that they were under pressure in night trading that was dominated by speculators," Mr Ram said. He said evening trade in coffee was allowed as around 70-80% of the commodity was exported. An Indore-based edible oil body official, who wished not to be named, said evening trading was stopped at the behest of regional exchange NBOT whose volumes were affected. "But even after evening trade was stopped, there was no jump in the volumes on account of flourishing parallel trade," the official said. Solvent Extractors' Association of India executive director B V Mehta said evening trade will provide a better price discovery mechanism in addition to liquidity. In a letter written to FMC earlier, the association mentioned that earlier when the evening session was available for soya complex, the solvent extractors units were able to manage risk far more effectively.