Parliament panel begins consultation after eight months

The parliamentary panel examining the government Bill to give autonomy to the commodity derivatives market regulator has, after eight months of quiet, begun consultations with stakeholders.

Parliament’s standing committee on food, consumer affairs and public distribution met officials of the Forward Markets Commission (FMC), the regulator, here today. They also visited all leading commodity exchanges here and are set to also visit those in Kolkata, Chennai, Bhopal and other cities.

“We would like to understand the views from all stakeholders,” said Vilas Muttemwar, chairman of the committee.

According to former FMC chairman, B C Khatua, the panel had its previous consultations in March this year, amid hope that it would make its final recommendations by April. That did not happen; instead, matters remained where they were, till this renewed action.

The Bill seeks to amend the Forward Contracts (Regulation) Act of 1952, giving the FMC powers akin to the Securities and Exchange Board of India for the capital markets. It would also allow instruments such as options and futures trading and allow the market to develop in other ways. The committee would also need to give an opinion on the relation between trade in agri commodities on a futures platform and price inflation.

The first Bill in this regard was introduced in the Lok Sabha in March 2006 and referred to the standing committee, which gave a report in December that year. A note was then prepared for the Union cabinet on amendments to the Bill, considered in May 2007. It was decided to have wider consultations and this was done. Later came a decision to withdraw the 2006 Bill and to introduce a new one. The panel is examining the latter.

Asked to opine on futures trading in agri commodities and inflation, Muttemwar said: “Nothing of that sort has emerged from our meeting with stakeholders so far. Rice and wheat are the two major commodities we are focusing on for inflationary concerns. These commodities are not actively traded on a futures platform.”

There are widely held views that financial institutions should be allowed into futures trading in commodities, he added.

The committee is to examine the infrastructure with exchanges and broking firms. It will also evaluate the types of people who can avail of benefits from futures trading in agri commodities.