Just as the Forward Markets Commission (FMC) is sitting pretty on the issue of setting a 2% cap on rubber futures intra-day volatility, the Rubber Board has swung to action-mode. A key rallying of the forces, upset by the rubber futures volatility, is expected to take place in the stakeholders’ meeting convened by the Rubber Board on October 15. ?The ministry of commerce will soon write to the ministry of consumer affairs, urging transparency in rubber futures,? says the Rubber Board chairman Sajan Peter. Although the ball has been in FMC?s court for a while, a decision is yet to crystallise, he told FE .
Upasi, ATMA, and various rubber-traders fora had sought that the intra-day fluctuations in rubber futures should be brought down from the recent 6% to 2%. Farmers are not too enamored by rubber futures in price discovery, since the farmgate price is almost 94% of the final price. A letter on the volatility cap from the Rubber Board chief to the FMC chief is yet to get a reply. Things came to a head, after FMC refused ?to accept individual positions?, in reply to a letter from a rubber dealers? outfit. ?This leaves the impression that only a few speculators who manipulate the rubber futures get a fair deal,? says N Radhakrishnan, president, Cochin Rubber Dealers Association (CRDA). Players in commodity futures, however, feel that the debate is getting too emotive. Rubber prices, according to them, are only supply-demand elastic. ?But, with some trade-offs from both sides, the transparency issue can be easily settled,? says CP Krishnan, commodities head and vice-president, Geojit BNP Paribas. For instance, we will concede that there is some substance in the board frowning on the rubber futures in ?near-months?. Price discovery in futures, ideally, happens in ?far-months?.
