The Securities and Exchange Board of India (SEBI) has extended suspension on derivatives trading of seven commodities for one more year till December 20, 2023. The ban has been imposed on paddy (non-Basmati), wheat, chana, mustard seeds, soyabean, crude palm oil and moong. 

Derivatives trading of several commodities has been banned or suspended as many as 19 times in the last two decades, with some facing multiple suspensions. The latest was the year-long futures trading ban on seven agri-commodities on December 20, 2021. 

A September report by NCDEX had said that suspension of futures contracts in the past had not resulted in the desired impact of controlling the prices. At best, there have been minor corrections in the short term. The extension will hit the NCDEX as these commodities contributed nearly 54 per cent of the total deposits between April 2021 and July 2021.  

The industry had hoped that the ban would be relaxed as retail inflation as measured by the Consumer Price Index came in at 5.9 per cent for November, which was the lowest in 11 months. 

Industry sources have said that the decision is without any rationale. In the past, the SEBI had banned futures trade in a single commodity, but banning seven commodity futures at one go is unprecedented and devoid of any logic, except pandering to populism, keeping in mind the never-ending elections, they add.