Futures trading ban on guar may be lifted soon

NEW DELHI: The government may soon lift the six-month-old ban on guar seed futures after an advisory panel on Tuesday recommended resumption of trading for better price discovery.

"The advisory committee is in favour of relaunching guar futures. We will soon take a decision based on its recommendation," said Ramesh Abhishek chairman, Forward Markets Commission, after a meeting with a 40-member committee, with representatives from all stakeholders in the guar business and commodity exchange officials.

In March, the market regulator had had banned traders from taking fresh positions in guar futures following complaints of price rigging, which allegedly pushed guar gum prices to a record Rs 1,00,000 a tonne - a rise of 1,000%.

The government panel later penalised 20 brokerages for irregularity in margin funding. However, it found no strong evidence of price rigging. The consumer affairs minister KV Thomas recently told ET that his ministry did not find strong evidence of speculative trading being the cause of the unprecedented price rise.

"We noticed that guar prices moved up even after we banned trading. It was primarily due to a strong export demand. We have not found any strong evidence of speculation. However, we are still studying other aspects," he had said. The advisory committee, set up in April, also recommended forming a commodity-wise sub-committee to track the movement of prices and bring alignment of futures market with physical market.