Cabinet approval to FCRA Bill boosts trader sentiment

Comexes turnover up 8% during October 1-15 after four fortnights of decline

With the Union cabinet clearing the Forward Contract (Regulation) Act’s Amen-dment Bill, raising a lot of optimism for a resurgence in the commodity futures market, traders have responded positively. The turnover of all commodity exchanges turned positive in the first fortnight of October, after four quarters of sustained decline.

Data compiled by the Forward Markets Commission (FMC), the commodity derivatives market regulator, showed an eight per cent rise in overall turnover to Rs 709,841 crore in the fortnight, compared to Rs 657,000 crore in the corresponding period last year.

On October 4, the cabinet approved the Bill, considered vital for growth of the commodity futures market. It will give teeth to the FMC and would also benefit farmers. Traders would get access to more instruments and commodities.

“It is too early to correlate the growth in commodity turnover with approval to the Bill. But the feel-good sentiment is surely up. Trade confidence has also risen significantly,” said Preeti Gupta, executive director of Anand Rathi, a leading commodity broking agency.

The Bill aims to provide financial autonomy to the FMC, which can become self-sufficient by collecting revenues in the form of fees from the exchanges. The Bill seeks to increase the penalty on defaulters to Rs 50 lakh from the existing Rs 25 lakh.

While the business in agri commodities remained up by 30 per cent to Rs 100,055 crore in the first fortnight of October compared to Rs 76,981 crore in the same period last year, overall turnover in bullion declined 11.2 per cent from Rs 352,868 crore to Rs 313,275 crore in the period under consideration. Total turnover in the energy segment surged 64 per cent to Rs 176,686 crore from Rs 107,455 crore.

Naveen Mathur, associate director of Angel Broking, attributed the growth in overall exchange turnover to high volatility in agri commodity prices, led by refined soy oil and jeera (cumin seed).

The Multi Commodity Exchange, the largest futures trading platform, had 86 per cent market share, followed by 10 per cent by the National Commodity & Derivatives Exchange.