FMC hopes govt will lift ban on commodities futures

Commodity markets regulator, the Forward Markets Commission (FMC), hopes the Central Government will lift the ban on futures trading on four commodities next month, a top official said.

“I hope that trade in the recently-suspended agricultural commodities will be revived,” FMC Chairman, B C Khatua, said at a meeting in Bangalore on Thursday. In May, the government had suspended futures trading in soyoil, potato, rubber and chickpea for four months, to control the soaring inflation.

FMC had convened a meeting of representatives of trade and manufacturers associations, chambers of commerce and industry, marketing federations and co-operatives, in Bangalore on Thursday. Khatua, in his inaugural address, highlighted the growth of the commodities futures market in India and the various initiatives taken by the regulator for the development and regulation of the market.

He, however, stated that in the recent past, trading in agriculture commodities had slowed down. This trend could be reversed through greater participation by hedgers, processors, importers, exporters and entities engaged in value-addition of the commodities, he said.

Khatua said the Indian commodities futures market, though of nascent origin, had stabilised and in some areas even surpassed markets such as the US.

Besides, through timely and vigilant regulation which addressed every small divergence as and when they arose, the market has been functioning without any major distortions, he said. Khatua pointed out that FMC’s efforts would be channelised towards ensuring efficient functioning of the market, with balanced participation by hedgers and speculators. Excessive speculation would be curbed and measures to increase the confidence and participation of genuine consumers would be given importance.

Khatua said that the priority for the current year was greater participation by hedger groups. As the members of the trade and manufacturers associations were important players in the physical market, their participation in the futures segment would not only add depth but would make price discovery more robust and relevant.