Dhaniya futures contract under regulatory glare

MUMBAI: Dhaniya or coriander futures contract on leading commodity exchange NCDEX has come under regulatory glare on concerns of a few large speculative traders having become active on the counter. "We have been closely watching the dhaniya contract for the past two months, monitoring prices and participation on the counter," said an FMC official. "While nothing is wrong per se with participation by any constituent not barred from trading on the market, we have to see whether they are abiding by the rules."

Coriander is a narrow commodity , which many futures market brokers and their clients are not active in. Being a narrow product prices can be easily manipulated.

NCDEX data show that the price of dhaniya for July delivery increased 12.5% to . 10,990 per quintal (100 kilos) over June. 'In addition, no deliveries have taken place in the commodity since April, though allocations for delivery were made. For instance, against allocations of 2,100 tonnes in April, 400 tonnes in May and 120 tonnes in June, zero deliveries have taken place.

However, the reason for this was lack of Food Safety and Standards Authority of India (FSSAI)-compliant dhaniya being supplied in the market, according to a top exchange official, who said this forced the bourse to reject deliveries being tendered by the sellers. He said the problem had now been resolved.

"The reason no deliveries took place in the dhaniya contract was that the exchange is required to abide by FSSAI standards. Since only farmers are exempt from FSSAI standards, there was no supply compliant with these in the market and consequently we were compelled to reject deliveries.

However, we have now modified the contract, while staying in compliance with the FSSAI standards, effective October with FMC approval and feel we have resolved the issue. We expect deliveries to recommence in the October contract." said Samir Shah, MD & CEO, NCDEX.

A futures contract facilitates the sale or purchase of an underlier at a preset price on a future date.