Capital markets regulator Sebi has extended the suspension of futures and options trading on seven agricultural commodities, including wheat and moon, for another year until December 2023 to keep prices in check.

Other agricultural products suspended by Sebi are paddy (not basmati), chana, crude palm oil, mustard seeds and their derivatives, and soybeans and their results.

“The suspension of trading in the contracts mentioned above has been extended by one year until December 20, 2022, that is, until December 20, 2023,” Sebi said in a statement on Wednesday.

The suspension allows the liquidation of existing positions in these commodities, but no new futures trades are permitted for one year.

To curb inflation, the Securities and Exchange Board of India (Sebi) in December 2021 banned exchanges from launching new soyabean, mustard seed, channa, wheat, paddy, moong and crude palm oil derivatives contracts. These instructions are valid for one year.

Earlier this month, the Commodity Participants Association of India (CPAI) urged the government and Sebi to allow exchanges to resume trading in seven agricultural derivatives contracts.

In a letter to the finance ministry and Sebi, the association said the extension of the ban is detrimental to the Indian commodity market ecosystem and seriously undermines people’s perception of the ease of doing business in India.

The CPAI mentioned that the prices of some of these commodities were below or close to the MSP last year, and many studies have concluded that commodity prices are mainly governed by supply and demand factors, with foreign exchange transactions not affecting prices.

If significant volatility is observed in agricultural contracts, the association recommends easily reversible options such as increased margins and lower open interest limits for agri-commodity derivatives contracts.