More reports on: Commodities

Sebi halves position limits for commodity traders to curb volatility in derivatives trading

16 January 2016

Market regulator Securities and Exchange Board of India (Sebi) has reviewed the existing norms related to commodity derivatives markets and has decided to reduce position limits for near month contracts in order to curb speculative participation and consequent volatility in prices of agricultural commodities.

Accordingly, Sebi has reduced the position limits for near month contracts for both member and client level from the present 50 per cent to 25 per cent of the overall position limits for all contracts expiring in the month of March 2016 and onwards.

The regulator also reduced the Daily Price Limits (DPL) from 6 per cent to 4 per cent.

Sebi has reviewed the performance and operation of the forward contracts being traded on the commodity derivatives exchanges and, as a risk management measure, decided to stop entering into fresh contracts by the participants in forwards segment till further orders.

However, the existing contracts will be allowed to be settled as per the terms of the contracts.

These steps are being taken in the interest of trade and public interest and for instilling confidence of market participants in commodity derivatives markets, Sebi stated in a release.

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