farmersNew Delhi, Jan 14 (PTI) Finance Minister Arun Jaitleytoday launched options trading in guarseed on the commoditybourse NCDEX and asserted that the new initiative will benefitfarmers and ensure better prices in the coming days.
Higher production has led to fall in prices of someagri-commodities in some places, he said, adding that optionstrading is one of the major steps towards taking farmers outof this situation.
NCDEX is the second exchange after MCX to launch optionstrading in commodities. In October 2017, MCX had launched goldoptions. Guarseed is the first agri-commodity options.
Options are derivatives which give a buyer the right butnot the obligation to buy or sell an underlying asset orinstrument at a specific price on or before a certain date.
"I hope this initiative will provide huge benefit tofarmers in the coming days," Jaitley said at the launch event.
Lauding the contribution of farmers, he said they haveleft no stone unturned to serve the nation. They have workedhard to turn a food shortage country to a surplus now.
However, due to higher production, they are now faced withfalling prices, he said.
"We see in some places the problem of falling pricesbecause of higher production. Farmers are not getting theprice for their produce. Many steps have been taken in thelast few years to take farmers out of this situation. Therehas been some impact," he said, adding that options trading isa step in that direction.
In the beginning, options trading may look like a smallstep but when its awareness increases in the coming days, itis will benefit farmers, he added.
Speaking on the occasion, NCDEX MD and CEO Samir Shahsaid, "The option trading is a powerful tool to hedge pricerisks...we are confident that this will boost the developmentof the agri-commodity market."Options will protect farmers from downward price movementas well as give them an opportunity to sell their produce athigher prices in case of price increase, he said.
NCDEX launched guarseed options as it is one of the mostliquid contracts on the exchange platform. Around 15 lakhfarmers are associated with this commodity.
"This is partial fulfilment of the Budget announcement.
We are expecting more. I hope the Finance Minister willannounce more for this sector to carry forward the growth,"NCDEX Chairman Rabi Narayan Das said.
Niti Aayog member Ramesh Chand, Nafed Managing DirectorSanjeev Kumar Chadha as well as senior finance ministry andSebi officials were present at the event.
According to NCDEX, three options contracts in guarseedthat will expire in February, March and April of this yearhave been made available for trading.
While market regulator Sebi had allowed exchanges tolaunch options in September 2016, it was only on April 26,2017 that it clarified that the options would have futures asunderlying for settlement. PTI LUXABM.
This is unedited, unformatted feed from the Press Trust of India wire.