No explanation is given in the mcx circular. Seriously how could they ban the most traded mcx commodity??
This is a good question.
Presumably, this refers to this circular issued by MCX, decided jointly with SEBI.
Further, at least the contract that expired yesterday (19-Jul-2019) and the one expiring in August (19-Aug-2019) are both showing heavy trading volumes:
Not clear why it has been decided not to launch any further contracts in Crude Oil Mini (10 Barrels) Futures contract.
Surprised and confused. I wonder what’s the rational behind it!
I guess anything that makes money for retailers, SEBI cant stand it
Well said. Either way if someone is successful in a market where 95% lose money then lot size shouldn’t matter.
According to MCX circular , Crude Mini contract is still available , at least for another 6 months i searched for crude mini DEC contract quotes , but its difficult to get , don’t know the further details , probably @nithin can answer this .
So, circular says december expiry is last available contract on crudemini to trade. Mcx is stoping to issue new crudemini contracts hereafter.
I am not sure but I believe there can any of the follow reasons.
- Now SEBI is the regulator of commodities, recently it allowed AIF( Alternate investments) to enter into commodity trading. Also it issued guidelines for MFs to enter in to commodities via multi asset and hybrid schemes. In a circular on 18 June 2019, Sebi laid out the guidelines for construction of commodity indices.For these things to happen all the contracts should be standardized and recently MCX also stopped copper and nickel mini contracts citing they need to be standardized and may release them soon with some changes.
- These mini contracts are just speculative as I believe there is nothing as 10 barrel oil contract globally which can be delivered, so SEBI might have asked them to stop in order to protect retailers or might have asked them to reissue with deliverable specifications.
FNO’s are itself speculative , if SEBI intention is good let them ban FNO product, totally for retail traders!!! and what will they do ( AIF & MFs ) by taking delivery of 100 barrel crude !!
AIFs won’t take delivery and also MFs have too many restrictions to take delivery, only thing is to standardize so that they can come up with relevant commodity indices.
SEBI wants all derivative contracts to be around Rs 5lks per contract value. That is why NIfty mini etc was stopped. With SEBI now in charge of commodities, all such contracts where the value of the contract is much lesser than 5lks is bound to get stopped from trading.
Sebi doesn’t like small retail traders. I won’t be surprised if a rule like PDT gets implemented in India where a person would need around 20 lakh to day trade just like in the US.
This is the response I got from MCX when I wrote to them:
As advised by SEBI, there won’t be any multiple contracts on the same commodity, except for gold, silver and precious metals after December 2019.
I think anything above 5L minimum account size, set by SEBI, will make volumes dry up. Mr Ajay Tyagi will be the lone market participant if its 20L
Already Indian market’s Mcap to turnover ratio has fallen 60%, the highest among major markets. Some retailers have already left.
One of the FNO segment , probably SEBI cannot do any thing is Currencies , RBI is controlling that , i am curious to know , what SEBI will do there !!!