FMC to meet soon on uniform delivery norms

Officials of the Forward Markets Commission (FMC) and the commodity exchanges are likely to meet "soon" to set uniform regulations for delivery and settlement at the exchanges, a senior FMC official said on Monday.

"We are meeting at the earliest possible to work out rules on delivery and settlement," said Anupam Mishra, director at the FMC. "Our recommendations would then be implemented by the FMC."

Mishra said this would be the committee's first meeting since it was set up in October to examine how delivery and settlement can be improved across exchanges.

He said no timeframe has been set to formalise the rules, but the six-member committee would try to wrap it up quickly.

One of the main items on the agenda would be how to make delivery compulsory on the day the contract expired, Mishra said.

"Delivery and settlement differ from exchange to exchange," said Mishra. "Some have compulsory delivery, while others have sellers' options."

Mishra said the overall thrust of the FMC is to enforce a compulsory delivery, though the "hows" will have to be pondered over.

"Compulsory delivery is common overseas, but we will have to see its feasibility in the Indian conditions," he said.

Delivery and settlement norms would be a part of several steps the FMC has taken lately to standardise the 24 commodity exchanges in the country.

For instance by November 20, all exchanges have been asked to comply with new open interest and price limits as well as initial margins.

"It would be easier for the market participants to understand trading at the exchanges with these norms in place," Mishra said.

Currently volumes are rapidly multiplying with the value of daily trade at major exchanges hitting Rs 80-90 billion a day.