Longer futures trading time may not boost volumes in agro commodity

Sanjit Prasad, CEO, ICEX said extending trade timing for commodity derivatives is a progressive moveas it takes commodity exchanges a step closer towards convergence of the two asset-markets. Such reforms will help healthy development and deepening of the market, he added.

Incidentally, trading volume in kapas (cotton), soya oil and crude palm oil, which are traded up to 9 pm on agriculture commodity focused NCDEX is abysmally low after the first half of trading ends at 5 pm.

Integrate markets

Naveen Mathur, Director (Commodity and Currency), Anand Rathi said though the advancement of trade timing to 9 am will integrate commodity market with equity, volumes in agriculture commodities are unlikely to pick up post 5 pm with extension of trade timing.

Moreover, he said, most of the domestic spot markets (mandis) are closed by 4 pm and lack banking facility till 9 pm.Hedgers will not be able to bring in that extra margin if there are sudden price movements in agriculture commodity in the international market.

Ajay Kumar, Director, Kedia Commodities said the overall 12 hours of trading time for a shallow agriculture commodity futures market is ‘an overstretch’ when the most liquid equity markets trade only 6.30 hours. The regulator would do well to allow mutual funds and financial institutions to participate in commodity trading than extending agriculture trade timing, he added.

However, he said aligning commodity market with equity and unified broking for both asset classes is positive.

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