Index-based trading may be allowed

Forward Markets Commission (FMC) is hoping to get approval from the Parliament on index-based trading in commodity futures soon. Though the two major commodity bourses MCX and NCDEX already has broadbased agro commodity indices, index-based trading is not permissible under the Forward Contract Act.

"I think the issue will be taken up in Parliament soon," said K S Uma, director, FMC. She was talking at a seminar organised by the Indian Chamber of Commerce in Kolkata.

The Parliament is also expected to take up issues like participation of financial institutions, mutual funds and foreign financial institutions (FIIs) in commodity markets, Uma added.

The FMC director also indicated that the commission was toying with the idea of demutualisation of commodity exchanges in line with what the Sebi was doing for the stock exchanges. "We would like to have guidelines for this," she said.

Arindam Saha, a representative of MCX said that the exchange was ready with the infrastructure required for index-based trading. "We are just waiting for a change in the act," he said.