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| FMC asks brokers to watch inactive trading accounts |
| Press Trust of India / New Delhi Dec 14, 2009, 16:41 IST |
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The Commodity market regulator FMC has asked brokers to keep a close watch on "inactive trading accounts" to avoid possible misuse and warned that failure to do so would attract penalty.
"To curb manipulation of inactive trading accounts, we have asked members (brokers) of the respective exchanges to keep a very close watch on inactive clients," Forward Markets Commission (FMC) Chairman B C Khatua said.
Monitoring of such inactive accounts will help avoid their undue influence on the commodity market and also on active clients, he said. According to FMC, inactive client are those who have not executed any traction during the last six months.
The FMC said it has issued a directive to commodity bourses asking members to follow certain guidelines on how to treat inactive clients and activate them again.
The NMCE has already issued a circular in this regard while other three exchanges — MCX, ICEX and NCDEX — are to follow suit. "The members should not accept trades in these accounts without specific written request from the client to re-open those accounts along-with all required formalities of Know Your Client (KYC)," it said.
If trade took place in such inactive account without following the prescribed procedure, the same would be treated as members' proprietary trade and such member will be liable for penal action by the exchange or FMC for any misuse of client account.
At present, a total of over 4,500 members are registered with all commodity exchanges, some with multiple bourses. Around 1,800 members are registered with MCX, 876 with NCDEX, 324 with NMCE and 195 with the newly launched exchange ICEX.
There are four national exchanges and 19 regional exchanges in the country.
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