The Securities and Exchange Board of India (SEBI) has suspended trading in all cotton futures contracts on the Multi Commodity Exchange of India Ltd for a month to revisit and revise contract specifications, MCX has said
The decision was taken during a meeting that the market regulator held on August 26 in Mumbai with the country’s largest commodity exchange and various stakeholders, including officials of the textile ministry, Cotton Corporation of India and various industry bodies.
In the meeting, several issues pertaining to the MCX cotton futures contract were discussed and it was decided to revisit and and modified the specification to for "wider value-chain participation", the commodity exchange said in a release.
The specifications will be modified whenever necessary in consultation with the MCX’s product advisory committee, which will have other stakeholders, including members of the textile advisory group, as invitees.
As the existing norms didn’t allow room for changes in the contract with open interest, contracts of January 2023 and subsequent contracts would be unavailable for trading until the revised specifications were finalised, which would take place within 30 days, the MCX statement said.
The exchange was also looking to expand its cotton advisory committee to allow more representation.
The market regulator also stressed on need for greater collaboration with industry and trade bodies to raise on cotton futures trading amid multiple stakeholders.
SEBI would keep a close watch to prevent market abuse in cotton contracts, the statement said.