FMC set to get greateroperational flexibility

The operational flexibilities might be attributed to NSEL controversy

Call it the impact of the National Spot Exchange Ltd (NSEL)-payment crisis, or the fact it is now under the ministry of finance. The Forward Markets Commission (FMC) may be given greater operational flexibility.

The regulator will get more monetary flexibility, as well as powers to recruit more staff and experts, possibly up to 200. A move to shift the commission to a new and bigger office is being finalised.

Since online nationwide commodities exchanges launched trading in 2003, there were talks and efforts to give it greater powers. However, all efforts to amend the Forward Contracts (Regulation) Act, or FCRA, governing commodity futures, failed.

The amendment pending, the ministry is understood to have assured FMC it would be provided more flexibilities in appointing legal consultants and recruiting more staff and experts, as well as greater flexibility to spend.

After the NSEL crisis broke out, FMC has been busy, with several cases filed to the high court, in most of which it is a party. While the regulator has only government advocates on its side, opposing parties are spending money on high-profile solicitors. The court has asked FMC to oversee the settlement of the e-series contracts, earlier suspended by the Financial Technologies-promoted NSEL.

The regulator’s office, currently small, might be shifted close to the Securities and Exchange Board of India’s office at the Bandra-Kurla complex. It is likely there would be better policy coordination between the two, said a source.

FMC’s manner of working, too, could be made similar to Sebi’s. A greater focus would be on transparency in decision-making. FMC has been included in the Financial Stability and Development Council, set up for regulatory coordination three years ago.

However, to provide it greater autonomy and legal powers similar to Sebi’s, the ministry will have to push the FCRA amendment Bill.