Wary of Liquidity Problem, Sebi says no to New Commex Futures

Published: 06th May 2016 03:27 AM  |   Last Updated: 06th May 2016 03:27 AM   |  A+A-

MUMBAI: As the NSEL scam continues to rattle investors in the commodities market, regulator Sebi on Thursday ruled out allowing trading in any new commodity futures unless assured of sufficient liquidity.

“Sebi has been very careful in allowing trading in new commodities. We want to do that but we will be doing it very carefully. Unless we are assured that there’s enough liquidity likely in some commodities, we will not consider that,” its chairman U K Sinha said.

The decision comes almost three years after the `5,600 crore scandal broke out at Financial Technologies-run National Spot Exchange (NSEL) in July 2013, which dealt a blow to the then thriving commodities markets.

The case is still pending with meagre recoveries and repayments to over 11,000 investors happening in bits and pieces.

Government allowed futures trading in commodities only a decade ago but the market could not gain depth due to the absence of large institutional players following government ban on their participation.

Sinha also said Sebi is continuously reviewing the risk management framework in the commodities segment and will bring in a mechanism to the level of securities market soon.

“Price discovery is very complex. For example, the physical market is controlled by the states and there are many obstacles and measures under the Essential Commodities Act.. I am not saying it is good or bad but these are difficulties... and what is the actual stock, what is actual crop output, such information is not available to us well in time,” Sinha said. on the sidelines of Risk Summit here.


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