Futures trading banned in 7 commodities for 1 year to curb inflation; SEBI issues orders for current contracts

SEBI asked commodity exchanges not to launch futures contracts of the seven commodities for one year. For running contracts, the markets regulator said no new positions would be allowed in these commodities

Commodities Ban
SEBI asked commodity exchanges not to launch futures contracts of the seven commodities for one year.

In order to reign in inflation, the government has suspended trading in futures contracts of some agricultural commodities for one year. Trading in seven commodities including paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong has been suspended with immediate effect, according to a Finance Ministry notification. Securities and Exchange Board of India (SEBI) asked commodity exchanges not to launch futures contracts of the seven commodities for one year. For running contracts, the markets regulator said no new positions would be allowed in these commodities, according to a SEBI order.

“No new contract shall be launched till further orders. In respect of running contracts, no new position will be allowed to be taken. Only squaring up of position will be allowed. These directions will be implemented with immediate effect. The above-mentioned directions are applicable, for a period of one year”, said SEBI in the notification. This comes amid the backdrop of consumer price-based inflation (CPI) or retail inflation surging to a three-month high of 4.91 per cent in November. Food inflation etched up to 1.87 percent in November from 0.85 percent a month ago with a rise in prices of vegetables. Clothing and footwear inflation was 7.94 percent in November, from 7.39 per cent in October.

Meanwhile, the wholesale inflation also jumped to 14.23 per cent in November as against 12.54 per cent in October. WPI inflation has remained in double digits for eight consecutive months starting April this year. According to the data, vegetable inflation, along with prices of egg and meat, hardened in November. Inflation in fuel and power basket was higher at 39.81 percent in November. The food index more than doubled to 6.70 percent compared to 3.06 percent in the previous month.

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