Commodity derivatives trade may close by 5 pm

The Securities and Exchange Board of India (Sebi) is considering a proposal to allow trading in commodities derivatives only till 5 pm — it is currently on till 11.30 pm.

This is a request from the Commodity Participants Association of India (CPAI), apex body for commodity brokers. After the countrywide lockdown, many say they find it difficult to call even the minimal staff required in the office. The Association has asked the regulator to cut the timing in line with those for agricultural commodities; the latter ends at 5 pm.

Equity derivatives’ trade functions till 3.30 pm but those in commodities traditionally remain open till late. Especially for globally referenceable ones, such as bullion, metals, and energy. International markets are open round the clock.

“As a temporary measure till normalcy is established again, it is advisable to cut trading timings to 5 pm,” said Narendra Wadhwa, president of CPAI.

On Wednesday, the commodity segments of all exchanges saw intense activity to covering traders' short positions, with the uncertainty after announcement of the new 21day national closure.

On the National Commodity and Derivatives Exchange, an agri commodity-centric one, several commodities were in the four per cent upper circuit without any fundamentals. This, said brokers, was because all those who were short were covering short positions.

Warehouses, transport and wholesale markets are functioning irregularly in the lockdown; labour is not available. As a result, delivering goods on contract expiry will be difficult.