CPAI asks SEBI to get new cotton future contracts released without delay

14 Dec 2022 , 01:53 PM

The Commodity Participant Association of India (CPAI) has petitioned the authority on capital markets, SEBI, to allow market participants to hedge and trade cotton futures contracts continuously. This comes after SEBI in August temporarily halted trading in all-cotton futures contracts on the MCX to bring the contract terms into line with market conditions.

Later, MCX disclosed that it is in the process of changing the cotton contract specification and that until the updated contract specification is finalized, no new positions in cotton contracts expiring in January 2023 or later will be allowed.

The existing contract will expire on December 30, 2022, according to CPAI’s letter to SEBI, which was sent on Monday. Five days before the expiration, the delivery period will begin. 

The group claimed that the cotton sector and players in the derivatives market were both disturbed and uneasy as a result of the notification’s delay.

As a result, it has recommended that the Securities and Exchange Board of India (SEBI) expedite the delivery of the contract specification for cotton, a commodity that may be referenced internationally, as soon as possible.

The daily price caps on the Indian cotton contract, according to CPAI, shouldn’t be restrictive under the new contracts. It shouldn’t be maintained so limitedly that it excludes participants from the ecosystem of exchange.

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