Futures ban hits NCDEX trading volumes

India's leading agri commodity bourse - the National Commodity and Derivatives Exchange said on Monday that its trading volumes have been hit by the ban on futures trading in pulses, wheat and rice.

The government had banned futures trading in tur and urad in January and on wheat and rice in February, after inflation began soaring because of price rise in essential commodities.

Pressure from a section of traders and political parties compelled the government to ban futures trading in these commodities; and the government has now set up a committee by Planning Commission member Abhijit Sen to study the impact of futures trading in agri commodities.

But the ban has had its impact on NCDEX. According to NCDEX Managing Director P H Ravikumar the exchange's volume might remain flat at Rs 11 trillion for the financial year ending March 31, 2008.

He told reporters that immediately after the ban on pulses, wheat and rice futures, daily volumes dipped to an all-time low of Rs 25

billion.

"Investor confidence in agri commodity futures has weakened after the government banned futures trade in pulses, wheat and rice," Ravikumar said.

But after the slow place of trading, investors and traders are coming back to the exchange platform to trade, the NCDEX Managing Director pointed. The exchange now is clocking a daily volume of around Rs 40 billion to Rs 45 billion.

Moreover, NCDEX is fast spreading out to commodities other agri products in futures trading. It has already announced that it would launch futures trading in coal.