FMC reviews brokerage trading rules for directors, proprietors

The Forward Markets Commission (FMC) is reviewing the rules on trading position limits for directors and proprietors of broker/trading firms on commodity exchanges.

“We are reviewing the overall position — the trading limits per commodity, the overall trading limits for a firm —in terms of the positions or exposure in the commodity market vis- a-vis those taken by clients,” said an official source.

The aim is to check directors or proprietors from taking multiple trading positions in one or more commodities under different names. The broader idea is to check speculative price manipulation in a commodity, prevent hoarding in and leave trading limits open for genuine traders.

The present norms date back to 2005 but there have been questions raised on implementation. Members of commodity exchanges are asked to disclose such information periodically and the FMC does its own investigation, on its own accord or on an abnormal price rise or complaint. National exchanges are also required to disclose their members’ proprietary position, according to a 2007 rule, on a daily basis.

In the US, their equivalent regulator, the Commodity Futures Trading Commission, is reworking some of its rules to curb speculative trading in crude oil. A federal statute there on some of these issues was enacted in 2010, in the wake of the 2008 financial crisis.