Commexes sales can grow to Rs 80 lakh-cr in '10: FMC

The commodity market regulator Forward Markets Commission (FMC) today said bourses can achieve the turnover target of Rs 80 lakh crore if resumption of forward trading in rice, urad, tur and sugar and launch of options and indices are allowed.

Futures trading in the the four commodities is banned and the launch of index and option requires Parliament passing the Forward Contracts (Regulation) Amendment (FCRA) Bill, which will also puts the FMC at par with stock market regulator Sebi.

"We hope to see the passage of FCRA Bill this year and also want to bring back all banned commodities on the futures platform to achieve the turnover target of Rs 80 lakh crore in 2010," FMC Chairman B C Khatua told PTI.

The turnover of 24 commodity exchanges in the country was over Rs 67 lakh crore till December 15, 2009.

The FCRA, which has provisions allowing FMC to launch options and indices in commodities, was introduced in Lok Sabha in 2008. However, it could not be passed before the dissolution of the 14th Lok Sabha and, therefore, lapsed.

Commodity broking firms and analysts share the view that the government should not further delay the passage of the Bill in 2010. They said reforms will help speedy growth of the seven-year old sector.

Last month, the Parliamentary panel on Food, Consumer Affairs and Public Distribution suggested that the government reintroduced the Bill in Parliament to strengthen the regulatory framework and confer autonomy on the regulator.

Experts also expect to see banned items back in futures trade in 2010, in addition to participation of banks, foreign institutional investors (FIIs) and mutual funds (MFs) and permission for Indian investors to trade in international commodity market.

"All banned items (rice, urad, tur and sugar) need to be re-listed as there is no proof that futures trading is responsible for price rise in spot market," Kochi-based commodity brokerage firm JRG Wealth Management Vice-President (Research) Harish Galipelli said.

Religare Commodities President Jayant Manglik said Indian investors should be allowed to take positions in the international commodity market and FIIs, MFs and banks should be allowed to invest in the Indian commodity market.

Another brokerage firm SMC Global Chairman and Managing Director D K Aggarwal said: "To widen the scope of the market, we expect the government allows mini-contract in agricultural commodities. Currently, mini-contracts are available in gold and silver."

Manglik also said he hopes the commodity market to live up to its potential and volumes to cross that of equity markets.

At present, the daily volume at the commodity market is to the tune of Rs 25,000 crore, compared with Rs 1,25,000 crore at the capital market, he said.