Bill for empowering Forwards Market Commission tabled in LS

A new Bill was introduced in the Lok Sabha today for giving more teeth to commodities market regulator Forward Markets Commission to enforce fair trading practices in the F&O segment, on the lines of the Securities and Exchange Board of India (Sebi).

The Forward Contracts (Regulation) Amendment Bill was introduced in the Lower House by Minister of State for Food and Agriculture K V Thomas and seeks corporatisation and demutualisation of existing commodity futures markets, as well as the introduction of goods and commodity derivative options.

The Bill was introduced amidst a din over the Opposition demand for setting up Joint Parliamentary Committee (JPC) to probe alleged irregularities in the allocation of 2G spectrum.

The proposed amendments, according to the statement of object and reasons of the Bill, were motivated by "growing demand for allowing trading in options and new generation of commodity derivatives, so as to provide wider opportunities for risk management."

The amendments, it said, would restructure and strengthen the commission broadly on the lines of the Securities and Exchange Board of India.

It is proposed to increase the number of members in the board of the Forward Markets Commission (FMC) from four to nine. However, the new members will be part-time directors and the number of permanent members will remain static, with three whole-time members and the chairman.

The amendment will empower the commission to levy fees and impose penalties on traders for violation of provisions of the Act.

The Commission, according to the Statement of Objects and Reasons, will be allowed to set up a FMC General Fund, to which all grants and fees would be credited.

The Bill also includes provisions for appeals against the orders of the FMC, with the Securities Appellate Tribunal as the apex body for resolution of disputes.