NEW DELHI: Capital markets regulator Sebi has sought explanation from commodities derivative exchange NCDEX in the matter of castor seed contracts, whose futures trading was suspended with immediate effect last evening.

Sebi has asked the NCDEX to explain what were the factors that led to suspension of trading and also the measures that were being taken by the exchange while positions were built up in that commodity, sources said.

The Sebi 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. When contacted, an NCDEX spokesperson said the exchange would reply to Sebi at the earliest and the regulator was also informed about the decision to suspend trading. The decision was taken after consulting the board, after the exchange apparently found the open interest positions for the next month contracts to be high and the prices low. In a circular, the exchange had said on Wednesday that it was suspending futures trading in all running castor seed contracts to ‘safeguard market integrity and maintain equilibrium’. — PTI