After Sebi order, NSE's commodities derivatives plans delayed by 6 months

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National Stock Exchange (NSE) wason Thursday barred from issuing any new derivatives contract for six months, after Sebi issued orders in the co-location case involving NSE. The bourse has also been banned from launching any new derivative products, as well as, from accessing the securities market directly or indirectly for six months. The order comes at a time when the NSE was planning to go aggressive in the commodity segment where it had entered just six months ago in October, 2018. The exchange has also been directed to disgorge profits worth over Rs 1,000 crore.  

Industry officials believe that the Bombay Stock Exchange (BSE) will be benefit from Sebi's orders as BSE is planning to launch new derivatives contracts in commodities like castor seed, turmeric, chana, etc. For the metal segment, it plans deliverable Kilo Bars contracts and Silver deliverable contracts in base metals.

NSE is exploring all legal options on the Sebi’s order, but its plans for launching new derivatives contracts will be delayed if the order remains valid. In last 7 months, with the entry of BSE and NSE in the segment, competition has intensified,but without any big impact. So far, non-agri commodities derivatives was largely controlled by MCX, while NCDEX was the dominant player in the agri segment.

However, BSE has seen a good traction in the agri segment. NSE has gold, silver and Brent crude oil contracts. Industry observers believe that NSE’s existing commodity contracts have huge potential to grow, but so far no significant development has been seen. NSE's plans in commodities derivatives include launching 25 tons mega metal contracts, eggs, some varieties of pulses, potato,etc, which will now have to wait. BSE, however, has a long list of agri commodities for launching derivatives. BSE will not have to face competition till NSE comes out with fresh contracts.

While the BSE spokesperson declined to comment, the NSE spokesperson said, “We had some plans for new contracts in commodities etc because that is a new segment for us. Some of those will have to be delayed for six months based on what our original plans were.”