1. NCDEX to compensate sellers affected by castorseed trade ban

NCDEX to compensate sellers affected by castorseed trade ban

After more than three months of ban on castorseed futures, commodity bourse NCDEX on Monday announced a compensation of Rs 120 per quintal to sellers who had valid deliverable stocks in the exchange-accredited godowns.

By: | New Delhi | Published: May 9, 2016 3:22 PM

After more than three months of ban on castorseed futures, commodity bourse NCDEX on Monday announced a compensation of Rs 120 per quintal to sellers who had valid deliverable stocks in the exchange-accredited godowns.

The compensation will be given from the funds deposited by 16 defaulting brokers and traders, whom regulator Sebi had in March barred from the securities market for manipulation in castorseeds trading at NCDEX.

In a latest circular, NCDEX said it will pay Rs 120 per quintal to sellers who had net short (sell) positions in the castorseed contracts on the exchange platform and correspondingly held valid deliverable stocks in the exchange -approved warehouses as on January 27.

Only registered members and constituents of the exchange (other than the defaulting members) are eligible to claim the compensation, it said.

“The compensation will be paid from the funds deposited by the defaulting members and not from the Investors Protection Fund. This is being done in the interest of market participants,” a senior NCDEX official said.

The compensation of Rs 120 per quintal is the difference between the final settlement price (Rs 3051/quintal) of castor seed of February futures contract and the close out price (Rs 2,931/quintal).

“Sebi has been very strongly driving investor protection and upholding the rights of investors. NCDEX continues to echo the same philosophy and has therefore declared the close out to redress the grievances of participants affected by the suspension of the castor seed contracts,” NCDEX Managing Director and CEO Samir Shah said.

The ‘close out price’ has been computed taking into account the Agmarknet prices prevailing in Deesa, Kadi, Palanpur and Patan markets from January 28, 2016 till February 19, 2016, the cost of transportation, storage, brokerage and other incidental expenses, NCDEX said in a separate statement.

“The admissible quantity of stocks shall be the lower of Net Short Position and the actual quantity of physical stocks held in Exchange-approved warehouses as on January 27, 2016,” it added.

NCDEX had suspended trading in Castorseed Contracts on January 27, 2016, pursuant to which Sebi also launched its probe and barred 16 brokers and traders from the securities market for manipulation in castorseeds trading at NCDEX.

The barred entities included Mid India Commodities, Neer-Ocean Multitrade, Investmart Commodities, Leo Global Commodities, Stride Multitrade, Vijay Saraf, Sisne Polymers and Ruchi Global Limited.

Other entities barred by Sebi were Bharat Foods Cooperative, Tanisha Multi Trading, Anju Jain, Piyali Trading, Vartika Mercantile, Secunderabad Oils, UKS Oils and Narsinpuria Korodimal.

  1. V
    Vinay
    May 23, 2016 at 8:19 pm
    The action by NCDEX and SEBI show that we still do not have rule of law; we are banana republic. Ministry of Finance should ask some hard questions to SEBI: a) The sellers had already made 40% returns in 1 and half to two months by maniting prices. Why sellers are being compensated? b) Is the futures market a delivery platform? Does every position on futures result in delivery? c) It is the NCDEX which suspended trading. Why should buyers compensate seller for suspension of trading? d) Why should the buyers not be compensated by the sellers, who manited the prices, and by the NCDEX who was complicit in price manition? e) What is the legal authority under which NCDEX withheld the Additional Base Capital of the four members even after the contract was suspended?
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