Kochi: Curbs imposed by the Forward Markets Commission on open interest positions for members of futures exchanges and their clients for nearby pepper contracts have adversely hitting pepper exports, besides giving wrong signal about the pepper market prices in India. However, since large volumes of stocks are lying at the exchange warehouses, exporters are unable to take delivery and it has resulted in stocks at the exchanges coming down. The brokers limits are now 500 tonnes and the individual participants limits at 170 tonnes and that is not serving any purpose since brokers limits are getting full before the clients position reaches 170 tonnes. In the past, exporters used to take delivery of the larger quantities they were hedging.
Due to non-availability of the spot and future delivery and nearby month being traded below market rate by Rs 5 to Rs 7 a kg, exporters are hedging only because of the discounts available and also the quantities at the exchanges. The decision of the FMC is actually restricting the genuine operators (investors) from exiting out of the market and prohibiting the exporters from covering their export sales in the futures market. Of late pepper futures trading were thrown open to public and the franchisees of the brokers, who were conducting futures trading through electronic system, have started serving as bucket shops.
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