The Budget has put forth an enabling environment for the growth of commodity markets. The Forward Markets Commission's (FMC's) merger with the Securities and Exchange Board of India (Sebi) addresses the long-awaited need to strengthen the regulation of commodity markets. This will pave the way for widening the scope of participation by banks, foreign institutional investors, mutual funds, etc, in the commodity exchanges.
With the adoption and application of the Securities Contracts Regulation Act, the introduction of a wide array of financial instruments like options and indices in the nascent commodity derivatives market now seem possible. This also means that commodity markets will align with the functioning of the securities markets. While the development is positive for the financial markets, the role of agriculture commodity derivatives in the developing economy will have to be taken into consideration and given due importance.
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Another important area that has been given its due is the creation of a national market for agricultural produce. The Budget recognised that farmers needed to be incentivised through realisation of reasonable price for agricultural production, and the reiteration of the creation of Unified Market Platform validates the government's resolution. This is a welcome move and vindicates NCDEX's stand.
MD & CEO, NCDEX