Why is trading in some agri commodities not allowed?
Trading in commodities like Kapas, Cotton Candy, and a few others is restricted on CubePlus due to their infrequent trading activity and associated risks. Here’s why:
Liquidity Concerns: These commodities are traded very rarely, leading to low liquidity. This poses challenges for traders as it may become difficult to exit a position.
Risk of Physical Delivery: In illiquid markets, there’s a risk that a trader might be unable to exit the position, potentially leading to the position being marked for physical delivery.
Bid-Ask Spread Variability: The bid-ask spread, representing the difference between buying and selling prices, tends to be higher in such commodities. This means orders may get executed at prices that are significantly apart.
To ensure a smooth trading experience, CubePlus focuses on providing a diverse yet secure environment.