FMC mulls hike in near-month limit in pepper, rubber for hedgers

Mumbai, Aug 30 | Updated: Aug 31 2007, 05:50am hrs
The Forward Markets Commission (FMC) is considering an upward revision in the near-month position limits for exporters, Chairman BC Khatua said.

We are examining the feasibility of hedgers demand to increase the near-month position limits, Khatua told NewsWire18. However, no decision in this regard has been taken as yet, he explained.

The near-month position limit for rubber contract is currently 8,000 tonne for members, and 2,000 tonne for clients.

For pepper, such limits are 500 tonne and 170 tonne, for members and clients, respectively.

Although, hedgers have higher position limits, on a case-to-case basis, in all far-month contracts, the near-month limits are at par with other traders.

Exporters, or hedgers, have been complaining to the regulator that with such low limits, they were forced to reverse their positions before the contract becomes near-month, he said.

This was leaving limited scope to hedge price risks in the volatile international commodity markets, Khatua said.

Exporters and hedgers are also interested in more deliveries on the exchange platform due to stringent quality norms adopted by the national commodity exchanges in these commodities, according to Khatua.

This is a good sign that they (exporters) find the quality of commodity on exchange platform much better than spot mainly due to strict quality norms (adopted by exchanges), Khatua said.

However, it is difficult to handle large deliveries on lack of proper infrastructure and logistics support, he said.