Sebi asks exchanges to review expiry of agro derivative contracts

The Securities and Exchange Board of India (Sebi) has asked exchanges to reconsider the expiration dates of agricultural commodity contracts given the operational disruption caused by the nationwide lockdown of 21 days in the midst of a coronavirus pandemic.

Following Sebi’s instructions, NCDEX – India’s largest agricultural commodity exchange – has extended the expiration dates of all of its agricultural contracts expiring from April 20 to April 30. “The exchange is constantly examining and making decisions,” said a spokesperson for the NCDEX.

The expiration of the scholarship for this month ended on March 20, a few days before the effective date of March 21. Since the lockdown, the volume of NCDEX trade has dropped by 50%. Falling prices for crude oil, guar gum and seeds contributed to the drop.

Experts had asked Sebi to merge the April and May contracts due to disruptions in the supply chain from farm to fork. Vijay Sardana, a renowned agricultural expert, said: “There are large-scale disruptions in the agricultural markets, warehouses, mandis and transport. These are basic realities. To avoid any unforeseen scenario on the derivatives market, Sebi must ask the stock exchanges to merge the April expiration contracts for agricultural products with the May contracts or to extend the expiration dates.

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