SMS, email registration must for trading on commexes: FMC

The Forward Markets Commission (FMC), the commodity derivatives market regulator, has directed commodity exchanges not to execute orders of their clients without registering them for email and SMS alerts. The directive, effective March 1, 2013, is set to enhance traders’ confidence towards the commodity futures market.

FMC, for the first time, has made exchange managing directors (MDs) and chief executive officers (CEOs) liable for adhering to these instructions.

On February 2, 2012, FMC had asked commodity exchanges to provide SMS and email alert facility for members and clients effective May 1, 2012. Exchanges were also asked to submit a progress report on a monthly basis devised for the purpose to the Commission. Now, the reporting format was revised in November 2012 to make the report more informative.

According to the latest report, some exchanges have made good progress while others have not shown improvement at all, said Nutan Raj, economic adviser to FMC, in a circular sent recently to commodity exchanges.

Further, she clarified that Ahmedabad-based commodity exchange National Multi Commodity Exchange and India’s largest commodity derivatives trading platform, Multi Commodity Exchange, have made progress in sending SMS and email alerts to about 76 per cent and 31 per cent clients, respectively, whereas for National Commodity and Derivatives Exchange and India Commodity Exchange, the corresponding coverage is only 3.5 per cent and 12.39 per cent, respectively.

Taking a serious view on the matter, FMC has asked commodity exchanges to complete 100 per cent coverage of all clients with SMS and email alerts by February 28.

“FMC clarified that the exchange should ensure that with effect from March 1, 2013, unless a client is registered for SMS and email alerts, he should not be allowed to trade,” the circular said. National level commodity exchanges can encourage their registered broking firms or any other type of members to make SMS and email alert mandatory for all trades executed through them.

“This is good for both clients and commodity exchanges. For members, it would confirm execution of trade orders,” said Naveen Mathur, associate director, Angel Broking.