Forward Markets Commission steps up vigil to curb volatility on NCDEX and MCX

MUMBAI: Commodity futures market regulator Forward Markets Commission (FMC) is closely monitoring trading in farm futures to prevent abnormal volatility in any agri commodity listed on exchanges like NCDEX and MCX, a top government official told ET. This even as total rainfall so far this season is 10% above normal.“The steady progress of monsoon has already resulted in many commodities coming off their highs but we are still keeping a watch on the market,” Ramesh Abhishek, chairman, FMC told ET.

Chana, castorseed, coriander and jeera have witnessed significant volatility in recent times, especially after fears of a deficient monsoon cropped up. To tackle ‘abnormal’ volatility, exchanges at FMC’s instance have advanced the delivery period in the likes of castor, chana and coriander and even introduced additional margins on longs and shorts. As a result of these regulatory actions, entities attempting to squeeze sellers by cornering stocks in the physical markets and simultaneously mounting bullish bets in the futures market were forced out of the market. This reduced excessive volatility in counters like castor which saw historic delivery worth Rs 948 crore in the January contract on NCDEX.

So far 29,369 tonnes of castor have been delivered in the June contract that expires on June 19, 8500 tonnes in chana and 100 tonnes in coriander. The FMC this month advanced the delivery period in chana and coriander from June 11 to June 4 which resulted in those trying to manipulate the counters moving out of the market at the risk of being forced to take delivery a broker said. Nine of the ten top clients were net long castor on Thursday, the same being the case in chana, NCDEX data shows.