To bring in more efficiency and transparency in agriculture commodities futures, market regulator SEBI has asked the Agriculture Ministry to connect the physical markets – from which it obtains information on spot prices to derive futures prices – to the online trading platform ‘e-National Agriculture Market’ (e-NAM).
Transparent spot prices“Having credible spot prices is crucial for determination of futures prices and ensuring that the futures market is not reduced to just a gambling activity. Since the online trading platform for farm produce, e-NAM, will create a transparent process for obtaining spot prices, we are keen that the Ministry includes the physical wholesale markets from which we obtain spot price data in the list of mandis that are to be initially integrated,” a SEBI official told BusinessLine .
The Securities and Exchange Board of India (SEBI) has already sent a letter to the Ministry asking it to consider online integration of those basis centres and additional delivery centres on the basis of which spot prices are being polled and futures contracts are being settled.
e-NAM was launched by the Prime Minister this April with the objective of integrating 585 wholesale markets through the online platform in the next two years for transparent determination of prices.
The Agriculture Ministry has responded positively to SEBI’s request.
“We will shortly have a seminar that will be attended by officials from SEBI, Agriculture Ministry and the States that want to participate in e-NAM. All relevant issues can be discussed and thrashed out,” the official said.
“We have been receiving complaints on the discrepancies in spot and futures prices and that these are being manipulated. We are sure that the quality of spot prices will improve tremendously once trading happens on e-NAM and as a result futures prices would also improve,” the official said. The eight States in which the pilot e-NAM project has been launched include Gujarat, Telangana, Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana, Jharkhand and Himachal Pradesh.
The commodities that will initially be sold online include chana (black gram), castorseed, paddy, wheat, maize, turmeric, onion, mustard, mahua flower, tamarind and shelling pea.