Last Updated : 01 July 2012 at 09:55 IST
Rubber futures a useful hedge says NMCE CEO, traders worried over volatility
Source :Commodity Online
Rubber traders in Kerala, the largest producer of rubber in the country, continue to be worried about volatility and lack of transparency in futures trading.However, NMCE CEO and MD, Anil Mishra, told investors that futures provided a perfect hedging platform and in its absence a few large traders would corner all trades
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KOTTAYAM, INDIA (Commodity Online): Rubber traders in Kerala, the South Indian State that produces over 90% of rubber in the country, once again raised apprehensions about volatility created by rubber futures trading and its lack of transparency at a Rubber Investors meet jointly organised by Commodity Online Group and National Multi Commoity Exchange (NMCE) here on Saturday.
Anil Mishra, MD & CEO of NMCE, pointed out that futures provided a perfect hedging mechanism for rubber growers , traders and consumers of rubber. In the past few years, in its interactions with Automobile Tyre Manufactures Association (ATMA) and All India Rubber Industries Association (AIRIA), NMCE has been able to convince them on the value it can generate through futures trading, he added.
Anil Mishra in a presentation packed with data and charts pointed out that volatility was higher in rubber in Tokyo Commodity Exchange (TOCOM) and other global exchanges but there was no daily price limits set for contracts. He said that decrease in volatility will result in fall in volumes. "Without futures, exchanges ,a monopoly will exist between the farmers and dealers, depending upon who is powerful. Hedging will only benefit both the sides,”he added.
Jose Mambarambil, Vice President of Indian Rubber Dealers Federation (IRDF) reiterated their demand to cap daily fluctuation in prices either upward or down ward by 2% in a 1+1 mechanism where trading would be first halted when 1% gain is reached as against the daily circuit limit of 4% at present in 3 +1 format.
He also pointed out that due to lack of transparency, traders and growers in Kerala were at a disadvantage while trading in futures and hence losing money. Also, they demanded that tradres who did huge trade volumes in anonymity profited from futures putting small rubber traders and growers at a disadvantage.
Traders lack of trust in rubber futures is evident from the rapid fall in volumes in rubber futures this year, Jose Mambarambill said.
Roy Mathews,General Secretary of Meenachil Taluk Rubber Dealers Association also stressed on the need for more transparency in the rubber futures trading.
George Iype, Managing Director of Commodity Online Group, pointed out that despite the economic slowdown in India and uncertainties in global economy on Eurozone debt crisis, the group’s trading business from its subsidiary, Celebrus Commodities Ltd, continued to show healthy volumes. This was the result of superior customer service and faith put in by the members of the trading community in Kerala, he said.
Saneesh Mathew, Branch Manager of Celebrus Commodities Ltd welcomed the gathering and Alex John, Manager, Business Development, proposed a vote of thanks. The meeting was attended by leading rubber traders, growers and investors in the region.
