With Sebi seeking explanation for suspending futures trade in castor seeds, NCDEX on Monday said a probe by an external audit firm has been initiated into the role of brokers and individual traders.
The exchange has also placed the trading terminals of four members (brokers) on ‘square-off mode’.
On January 27, the exchange had suspended futures trading in all castor seeds contracts after it found the open interest positions for the next month contracts to be high and the prices low.
“The exchange has initiated investigation into the role of members (brokers) and their clients (individual traders) through external audit firm/s,” the commodities derivative exchange, NCDEX, said in a statement.
Meanwhile, the exchange placed trading terminals of four brokers — Mid India Commodities, Investmart Commodities, Neer-Ocean Multitrade Private and Leo Global Commodities — on ‘square-off mode’ until further notice.
“Any member found guilty of violations of rules, bye-laws and regulations of the exchange shall be strictly dealt with in accordance with the provisions,” the exchange said.
According to sources, Sebi has asked NCDEX to explain what were the factors that led to the suspension of trading and also the measures that were being taken by the exchange while positions were built up in that commodity.
The regulator has also sought details about the risk management measures in place at the commodity exchange.
Sebi has been keeping a tight vigil on the commodities derivatives market ever since it began regulating it pursuant to the merger of erstwhile commodity regulator FMC with it. — PTI
