Caps have been increased in 17 contracts including wheat, soybeans, pepper, turmeric and potatoes after a review by the regulator, the Forward Markets Commission, Vijay Kumar, chief business officer at the bourse, said in a phone interview today.
“If the limits are too small, then there is not necessarily enough trading interest and that in turn effects depth and liquidity in the contract,” Kumar said. “You need certain level of position limits to further build liquidity and permit more hedging in these contracts.”
The Multi Commodity Exchange of India Ltd., the country’s biggest such bourse, also revised open-interest limits on 13 farm commodities, it said in a note on Feb. 25.
The new limits are also meant to ensure that “no one individual or group can actually have positions that constitute a significant share of the market,” Kumar said.
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