FMC for banks, MFs in comexes

The Forward Markets Commission (FMC) had recommended to the government to allow banks, foreign investors (FIs) and mutual funds (MFs) in commodity trading for wider participation, said chairman B C Khatua today on the sideline of the release of a quarterly magazine, 'Commodity Vision' in Mumbai.

The recommendations assume importance in the backdrop of a recent government view not to allow banks and MFs in commodity markets, on the fears of futures markets stoking inflation.

The recommendations are currently under the consideration of a Parliamentary committee, which is looking into the amendment to the Forward Contracts (Regulation) Act, 1952.

The commodities market regulator expects the amendment to be passed in the next session of the Parliament.

The entry of banks, FIs and MFs was not purely meant for increasing volumes and turnover on commodity exchanges, but for wider participation in futures trade, Khatua clarified.

Talking on the foreign direct investment (FDI) in commodity exchanges, he said the FMC favoured the Securities and Exchange Board of India (Sebi) guidelines, which are applicable to the stock exchanges. According to the Sebi guidelines, no single investor can own more than 5 per cent stake in each stock exchange.

On spot exchanges, Khatua said that they are likely to revolutionalise spot trading in the country, provided the same information is disseminated to buyers and sellers of commodities to decide the next course of action freely and fairly.

The two national exchanges, MCX and NCDEX, are awaiting the Agriculture Produce Marketing Committee (APMC) Act to be approved by the states for uniform price dissemination and fair online dealings.

"Its up to the promoters to decide when to launch spot exchanges," said Khatua.

Commenting on Khatua's statement, Jignesh Shah, managing director and and CEO of MCX said that the exchange would look into the matter of spot exchanges. "If the Maharashtra government approved the APMC Act, we would launch trade on our spot exchange, the National Spot Exchange (NSEL), as soon as possible," he added.

Meanwhile, the MCX Academia of Economic Research (MCER), a publication and training arm of the MCX, launched a quarterly magazine, 'Commodity Vision' in Mumbai on Tuesday.

The MCER is involved in facilitating theoretical and practical training to academicians inside and outside the exchange platform. The magazine was released by FMC Chairman B C Khatua.