The Forward Markets Commission (FMC) recently moved swiftly to curb “abnomal” volatility in prices and build-up of open interest in castor seed and coriander contracts traded on the National Commodity and Derivatives Exchange (NCDEX).
“After detailed analysis, directions were issued by the commission to the exchange to advance the staggered delivery in these commodities with effect from December 29, 2014 instead of January 11, 2015,” the FMC said on Monday.
It also directed the exchange to impose pre-expiry margins from December 26 last year, “in a progressive and linear manner everyday so that buyers and sellers pay cumulative margins equal to 100% of the value of the contract as margin on the contract expiry date,” it added.
Consequently, castor seed stocks rose to a record 4.30 lakh tonne worth R2,100 crore as of January 19 from 2.05 lakh tonne a month before.
A delivery of 2.03 lakh tonnes, valued at R947.95 crore, was executed in castor seed January contract on NCDEX, the highest recorded delivery executed in any farm commodity on the exchange platform, the FMC said.
Coriander stocks also shot up to 10,858 tonne as of January 19 from 6,923 tonne a month before. A delivery of 8,230 tonne worth almost R95 crore was executed in the January coriander contract, the highest recorded delivery in the commodity at the NCDEX platform.
Through the intervention, the FMC has warned that any “attempt at manipulation in the commodity futures market will not be tolerated”.
“The large-scale physical deliveries on the exchange platform is also a clear indication of the healthy participation of physical market players in commodity exchanges and the effective hedging on this platform,” it said.