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| NCDEX to check 'dabba' trading in tier two towns |
| BS Reporter / New Delhi/ Chandigarh Aug 19, 2010, 00:34 IST |
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Taking cognizance of the unscrupulous brokers engaged in ‘dabba trading’ (Dabba trading refers to the practice of trading with a broker bypassing the exchange), and the loss incurred by the gullible investors, the NCDEX (National Commodity and Derivative Exchange Limited) has taken the initiative to arrange awareness sessions in the tier two towns. Dabba trading, also known as ‘bucketing’, is used by brokers to route their client’s trades outside the Stock/Commodity.
Talking to media, NCDEX Chief Business Officer V Vijay Kumar said that the practice was more prevalent in the states of Haryana, Rajasthan, Madhya Pradesh, Uttar Pradesh and parts of Punjab. He added that the trading community dealing in cotton, soyabean, guar, chana, mustatrd and soya oil in order to save on transaction charges and margin requirements fall in the trap of illegitimate brokers.
“To avoid pitfalls in dabba trading, investors are advised to trade only through well-known brokers or broking houses dealing in the commodity futures trading.
Exchanges normally impose 5 per cent to 15 per cent of contract value as margin and ensure a daily mark to market settlement. If trade is routed through an exchange the investor always gets a contract note. While trading on an exchange; exchange order number or trade number is always provided”, he added.
Kumar told that it has been estimated that a parallel volume of commodity trade was routed through the bucket trading.
He apprised that they have been trying to mobilise the Economic Offence wings of the state police deaprtments to state strict action on the reports against the brokers indulging in such activities.
NCDEX has over 850 members across India and the clients should trade through the authorised brokers only.
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