Futures turnover to top Rs 100 lakh crore: FMC

Turnover on commodity exchanges in India, the top gold user and the second-largest wheat and rice grower, may jump more than 28 per cent as sugar futures trading resumes and new bourses start up, the industry regulator said.

Trading value may exceed Rs 100 lakh crore ($2.1 trillion) in the year to March 31, from Rs 77.65 lakh crore a year ago, B C Khatua, chairman of the Forward Markets Commission, said in an interview in Mumbai yesterday.

The Indian Commodity Exchange, founded by Indiabulls Financial Services Ltd. and state-run MMTC, will complete its first full year of trading and ACE Derivatives & Commodity Exchange, the fifth national bourse, will begin operations next month, Khatua said.

Turnover on Indian commodity bourses has surged 120 times after electronic trading was introduced in 2003, according to the regulator.

“The perceived utility of the futures market is growing, so there will be more and more people coming to the market to hedge their requirements,” Khatua said. Commodities worth Rs 38 lakh crore changed hands from April 1 to August 15, an increase of 56 per cent from a year ago, the commission said last week. “The natural growth of the markets and some commodity prices have gone up” impacting the turnover, Khatua said.

The Forward Markets Commission is studying a proposal by the Indian Commodity Exchange to take billionaire Anil Ambani’s group company as an anchor investor, Khatua said.

The plan will be referred to the government for approval because Indiabulls is exiting before the end of a three-year lock-in period, Khatua said. The exchange began in November.

Indiabulls will sell a 26 per cent stake to Reliance ADAG, paring its holding to 14 per cent, the exchange’s Chief Executive Officer Sanjay Chandel said in an interview on August 27.

Sugar supplies
The government may lift the ban on trading sugar futures next month, Farm Minister Sharad Pawar told reporters August 19. The restriction, imposed in May last year to keep prices from rising because of a shortage, was extended in December until September 30 this year.

The nation’s sugar output may be 25.5 million tonnes in the year starting October 1, more than the annual demand of 23 million tonnes, the Indian Sugar Mills Association said last month.

“Going by the current trend of production, the price trend and the overall global supply situation, my opinion is that the suspension need not to continue. We can restore it in October,” Khatua said. “This contract was very liquid before suspension. It was very active in terms of delivery as well.”