The Securities and Exchange Board of India (SEBI) has suspended trading in all cotton futures contracts on Multi Commodities Exchange of India Ltd for one month to revisit and revise contract specifications, MCX said.

The decision was made at a market watchdog meeting with the country’s largest commodity exchange and various stakeholders, including officials from the Ministry of Textiles, Cotton India and various industry bodies in Mumbai on August 26.

In a press release, the Commodity Exchange said the meeting discussed several issues with the MCX cotton futures contract and decided to revisit and revise the norms for “broader value chain participation.”

If necessary, revisions to the specification will be negotiated with MCX’s Product Advisory Committee, which will invite other stakeholders, including members of the Textile Advisory Group, as invitees. MCX stated that the January 2023 contract and subsequent contracts would not be tradable until the revised specification is finalised and completed within 30 days.

The exchange also wants to expand its Cotton Advisory Committee to increase representation. The market watchdog also highlighted the need for greater collaboration with industry and trade bodies to increase cotton futures trading volumes among multiple stakeholders. The statement said SEBI would pay close attention to preventing market abuse of cotton contracts.

According to Bloomberg, India is the world’s largest cotton producer, but rains and pests have forced the country to import cotton. Not only India but the world’s largest cotton producer is also suffering from reduced harvests due to the effects of climate change.