Futures in wheat, rice may resume soon : FMC

The Forward Markets Commission (FMC) expects the ban on futures trading in wheat, rice, urad and tur, which was imposed in 2007 to control prices, to be lifted in “a few weeks’ “ time.

Speaking to reporters after meeting representatives of major exchanges here on Friday, B C Khatua, chairman, FMC, said the ban could be lifted by the end of December or by January.

The FMC has sent a detailed report to the government, favouring the lifting of the ban, and also held discussions with the ministry concerned, Khatua said.

On November 30, the government had allowed the ban on futures trading in four other items — rubber, chana (chickpea), potato and soyoil — to lapse, after inflation had eased to 8 per cent for the week ended November 29 from double-digit figures earlier in the year.

The FMC had also not issued any notification to extend the ban.

“We have done adequate analysis of prices, demand and availability of food articles. We hope that in a few weeks’ time, we will be able to start commodity trading in these four commodities too,” said Khatua.

The chairman was hopeful that the Warehousing (Development and Regulation) Act 2007, if passed, would help the exchanges to start physical delivery of goods through negotiability of warehouse receipts, which can be traded in both spot and futures markets.

As the receipts can be sold and traded in the exchanges, multiple physical delivery can be avoided, he added.

E-trading of negotiability of warehouse receipts would require convergence of laws governing futures market (currently under FMC), spot exchanges (under the state governments), and the regulator for warehouses.

“We can have a convergence of the three, so that there is a single regulator in the electronic market, enabling trade of receipts,” he said.

The FMC has sent its suggestions in this regard to the Central Government.

As e-trading in warehouses will be governed by the proposed act, the Agriculture Produce Marketing Committee (APMC) Act, which is a state subject, cannot hinder trading in the electronic market.

Khatua admitted that the APMC Act has restricted opening of spot exchanges in many states.

At the meeting of representatives of exchanges with the FMC, issues such as uniformity in the fee charged by the exchanges, contract design, extension of trading time in agriculture commodities and membership fees were discussed.

Khatua said the FMC was in favour of starting options trading in commodities, expanding corporate trading and taking up portfolio management services.