Commodities futures trade volumes fall for second year

Tags: Commodities
Commodity futures trading volumes in India fell 40.49 percent in the year to March 2014, its second straight year of decline, the market regulator said on Tuesday.

In value terms, futures trading at commodity exchanges fell to 101.44 trillion rupees in the first twelve months from April 2013 from 170.46 trillion rupees a year ago, the Forward Markets Commission said in a statement on its website.

Trading in gold bullion fell more than 25 percent to 43 trillion rupees in the year to March 2014, from 78 trillion rupees in the same period last year. Metals volumes fell 46 percent to 17 trillion rupees, and volumes in agricultural commodities fell 25 percent to 16 trillion rupees.

The plunge in volumes and lack of fresh capital is expected to cause at least one national-level exchange, the Indian Commodity Exchange controlled by Reliance Capital, to shut down.

The world's second-biggest buyer of gold and second-biggest producer of wheat, India allowed commodities futures trading only in 2003. But enthusiasm has dried up since a scam was unearthed last July at the National Spot Exchange owned by Financial Technologies India, which also owns the largest exchange, the Multi Commodity Exchange.

In addition, also last July, India levied a Commodities Transaction Tax (CTT) of 0.01 percent on trade of all non-agricultural commodities futures and a few agricultural commodities futures, and increased restrictions on imports of bullion.

"The very first jolt was that when CTT was introduced and then the NSEL fiasco," said Haresh Galipelli, vice-president, Inditrade Derivatives and Commodities in Hyderabad.

"We have already seen peaking of retail participation and for the market to reach new level, we need more participation of banks, institutions...."

India has 21 commodity bourses, including six operating at the national level, trading about 80 commodities ranging from gold to carbon credits. Foreigners are still not allowed to trade in futures, but can buy stakes in the exchanges.

"Consolidation will continue in commodity trading unless we pass the FCRA (Forward Contract Amendment Bill) and launch innovative products like options," Galipelli said.

The bill has been pending in parliament for a decade.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Redefining the age of minors from 18 to 16 makes sense

    An issue that’s been simmering since the horrific gangrape of December 2013 is finally being laid to rest.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

The difficulties with war history

There have been a series of commemorative events lately. Last ...

Anish Chakraborty

Betting big on Pascal’s wager

Blaise Pascal was a 17th century French philosopher mathematician and ...

Bubbles Sabharwal

The five cardinal rules of urban snobs

Believe it or not there is the unspoken-of society of ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture