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Sebi reduces commodity derivatives timings till 5 PM over virus lockdown

CIO Insider Team

Amid the lockdown over coronavirus, the Securities and Exchange Board of India is looking forward to a proposal that cut down the trading hours for commodity derivatives from 11.30 pm to 5pm. The new timings will be followed till the stretch of the lockdown period as announced by Prime Minister Narendra Modi.

The decision is followed by brokers’ submission to the regulatory body requesting such measures in the lockdown. A large number of brokers have found it difficult to call minimum staff required in office. For derivatives and cash market, equity

derivatives will be open to run till 3.30. Notwithstanding, it has clarified that commodities including that of globally referenceable commodities such as bullion, metals and energywill remain open till late. Moreover, international markets are open round the clock.

Earlier in March 23, Sebi has held discussions with exchanges whether to continue the operations of the market without the underlying spot market. Currently, the countrywide lockdown till April 14 has made the condition extremely tough for brokers and exchange staffs to reach office though the ban does not affect them. In the light of this, the apex body of commodity brokers - Commodity Participants Association of India- has approached the capital and commodities market regulator for derivatives that draws parallel to the agriculture commodities which end at 5pm.

According to brokers, on NCDEX, an agriculture commodity centric derivatives exchange, most of the commodities were in 4 percent upper circuit since all those who were short covered short positions, without any proper fundamentals. This raised major concern about market closure. “As a temporary measure, it is advisable to cut trading timings to 5pm till normalcy,” said Narendra Wadhwa, President, CPAI.
Lockdown might hamper the warehouse operation, transport, and mandis, and labour becomes unobtainable.

In this scenario, delivering items on expiry are troublesome. Therefore, Wadhwa urged that Sebi should merge present contract with agri commodities with the following month’s expiry contract.

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