Curbs Sought in Rubber Futures Trading

Curbs Sought in Rubber Futures Trading

A tougher regime, restricting the current monthly transactions to be strictly against delivery, will curb daily volatility in rubber futures trading to great extend, the trading community has said.
Sharing this view with the Expert Committee constituted by the Forward Markets Commission (FMC) to examine the issues in rubber futures trading, it said the restrictions would help bring down the unprofessional activity that marred the process.
The committee held its sitting at the Indian Rubber Research Institute on Thursday. George Valey, member and president of Indian Rubber Dealers’ Federation (IRDF), said one of the major terms of reference of the committee was to examine the restriction on daily volatility of futures trade in natural rubber from the present 4 per cent (3+1) to 1 or 2 per cent. It was also found that much of the speculative activity occurred during the 1st to 15th of every month, he said.
If we can bring in the restriction, the unprofessional activity from those who are here for a quick buck could be discouraged, he said.
The traders also found the current permitted rate of volatility of 4 per cent, too high. The present rate was fixed in 2003 when the price of natural rubber was much lower. With the prices now hovering around Rs.200 per kg, the permitted volatility rate in rupee terms will come to Rs.16 per kg (which means rubber price can vary between Rs.192 and Rs.208), he said.
But the optimum permissible volatility level would be 2 per cent (1+1) for a reasonable business atmosphere. Mr. Valey said. This would also have a positive impact on the marginal traders whose business, in turn, had impact on the farm gate price of the product, he added.
The traders wanted to bring in transparency in the business through a system wherein the identity of the real sellers and buyers of each of the transactions would be displayed online. They called for fixing ceiling on the quantity that could be possessed by traders at 500 tonnes.
The next meeting of the committee would be in Kochi, its chairman K.K. Abraham said.
(Source: The Hindu)





Rubber Output to Climb to 2.92 Million Tons in Third Quarter

By Swansy Afonso
July 27 -- Rubber production from key growers
may expand at a slower pace of 2.1 percent in the three months
through September, compared with a growth of 6.2 percent a year ago, the Association of Natural Rubber Producing Countries said.
Output from members, representing 93 percent of global
supply, may climb to 2.92 million metric tons, the group said in
its monthly bulletin today. Production in 2012 will grow 4.8
percent to 10.83 million tons, it said.
Exports in the July-September period may total 2.07 million
tons, compared with 2.04 million tons a year earlier, the
association said. Shipments this year may be close to 8.28
million tons estimated in June, it said.
(Source: Bloomberg)