FMC warns PXIL and its members

In what could hit trading on Power Exchange of India Ltd (PXIL), the Forward Markets Commission (FMC) has warned it to cease trading in contracts beyond 11 days of payment and delivery. The FMC has also advised traders to desist from trading such contracts on PXIL.

The stakeholders in the exchange are Power Finance Corporation Ltd, Gujarat Urja Vikas Nigam Ltd, West Bengal State Electricity Distribution Company Ltd, Madhya Pradesh Power Trading Company Ltd, JSW Energy Ltd, GMR Energy Ltd and Tata Power Trading Company Ltd

Promoted by the National Stock Exchange and the National Commodity & Derivatives Exchange (NCDEX), PXIL completed its first year of launching contracts two days ago.

In a warning to the exchange and its members, the FMC has threatened that those who enter into such contracts or are involved in organising or assisting in organising such trading are liable for criminal prosecution under the FCR Act, 1952.

According to the Act, such trades fall within the jurisdiction of the FMC and organisations offering such contracts for trade require permission from the commodity market regulator. PXIL has not taken the approval.

An PXIL official said, “We have no comment to offer, as we have received the FMC letter just now. However, we have already taken all necessary permission from the Central Electricity Regulatory Commission (CERC), the power regulator in the country.”

The FMC and the CERC have been at loggerheads over regulating power contracts.

Pramod Dev, the CERC chairman, however, said the applicant had to meet the statutory requirements of all authorities. Because of regulatory overlappings, the CERC’s permission alone would not suffice, he added.