The Securities and Exchange Board of India (SEBI) has announced an extension of the suspension on trading in certain commodity derivative contracts.
SEBI Halts Trading On Commodities
The trading ban, which initially began in December 2021, will now remain in place until January 31, 2025.
SEBI on Wedenesday stated that it had first directed stock exchanges operating in the commodities derivative segment to halt trading in specific contracts on December 19, 2021.
The suspended contracts included paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soybean and its derivatives, crude palm oil, and moong. Initially, the trading suspension was imposed for a one-year period, ending on December 20, 2022.
SEBI said "In continuation of the said directions, the suspension in trading in the above contracts has been extended till January 31, 2025" Since then, the ban has been extended twice, first until December 20, 2023, and then to December 20, 2024. With the latest directive, SEBI has further prolonged the suspension until January 31, 2025.
SEBI extends suspension on trading of paddy, wheat, chana and other Commodity Derivative Contracts until Jan 2025
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The decision to suspend trading in these contracts was aimed at curbing excessive speculation and ensuring better price stability for essential agricultural commodities.
SEBI Urges Compliance
The regulator emphasized the importance of maintaining market discipline and protecting the interests of stakeholders in the commodity markets.
This extended suspension affects derivative contracts on key agricultural commodities that are vital to India's food security and economic stability. SEBI has urged stock exchanges in the commodities segment to comply with its directives and continue adhering to the suspension.
Market participants and stakeholders will now await further developments as SEBI continues to monitor market conditions and assess the need for any additional measures in the commodity derivatives space.
Commodity derivative trading involves buying and selling financial contracts whose value is based on the price of an underlying physical commodity like oil, gold, wheat, or copper, allowing investors to profit from price fluctuations without physically owning the commodity itself.
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