Skip to main content

Sebi brings non-agri commodities under staggered delivery contracts

By
Market regulator, the Securities and Exchange Board of India (Sebi), has expanded the horizon of all compulsory delivery contracts under staggered delivery, a move that aims to reduce price manipulation and improve liquidity on commodity exchanges. Sebi has also cut the minimum staggered delivery period to five days from the existing 10 days, leaving the discretion of fixing the higher number of days on the concerned exchange, depending upon the history of the relevant commodity. In a circular issued on Friday, Sebi said, “All compulsory delivery commodity futures contracts (agriculture as well as non-agriculture commodities) shall have a staggered delivery period. The minimum staggered delivery period should be five working days” Staggered delivery period is the period beginning few working days prior to expiry of any contract and ending with expiry, during which sellers / buyers having open position may submit an intention to give / take delivery. The markets regulator has been consistently liberalising regulations with market-friendly decisions, as it aims to bring in more participants and improve hedging potential on commodity exchanges. "Sebi has directed all the exchanges to make uniform mechanism in the interest market participants and accordingly make changes in contract specifications (if required). In my view making a uniform staggered delivery mechanism for commodity exchanges will help participants for giving and taking deliveries,” said Manoj Kumar Jain, Director and Head of Commodities, IndiaNivesh.

“The expansion of staggered delivery across all compulsory delivery contracts is a good move which would avail participants with more number of trading days, translating thereby increase in volume of business. It will benefit monthly contracts more than long period contracts,” said Kishore Narne, Associate Director, Motilal Oswal Financial Services Ltd. In fact, commodity exchanges had requested Sebi to bring the minimum period down to five days to have more number of trading days available. “The decision will enhance liquidity of commodity exchange,” said Naveen Mathur, Director, Anand Rathi Shares and Stock Brokers Ltd. In a separate circular, Sebi fixed 25 per cent as maximum cap on exchange’s free reserves for introducing liquidity enhancement scheme (LES) in any options contract. The exchange is allowed to introduce discount or adjustment in fees or cash payment. The incentives during a financial year shall not exceed 25 per cent of the net profits or 25 per cent of the free reserves of the stock exchange, whichever is higher, Sebi clarified. While MCX, according to trade sources, have already discontinued LES in options, NCDEX is yet to make any significant gain from this liquidity booster scheme.

Business Standard, 27th July 2019

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more