The ministry of food and consumer affairs has set up an advisory body comprising industry stakeholders to advise it on pricing and futures trading in commodities.
The body will be chaired by the chairman of the Forward Markets Commission (FMC) and represented by members of the government, past members of FMC and the ministry of consumer affairs, commodity exchanges and their stakeholders, etc.
This follows a proposal from the ministry early this month for setting up an institutional mechanism to consult all stakeholders regarding the regulation of the commodity futures market. Officials said it would bring about needed changes in the working of these markets, to bring down excessive speculation, improve hedging and a better alignment with the physical market.
The primary agenda of the advisory body will be to suggest action to the government on issues related to commodities, pricing and futures trading. Officials said instead of setting up advisory commodities from case to case as and when a situation arose, it was better to have a permanent advisory body. This committee will be monitoring the markets and advising the government on various action plans on a continuous basis, they said .
“Commodities prices are sensitive and every now and then, FMC comes under scathing attack for any upside trend in any commodity prices. The basic demand is then to stop trading of such commodity on exchanges,” sources said. Therefore, they said, there is a need to continuously monitor the prices by an independent body.