The Hindu Business Line : FMC planning to abolish changes in futures contract specifications

THE Forwards Market Commission (FMC) will soon prepare a proposal on participation of mutual funds and financial institutions in multi-commodity exchanges.

According to Mr S. Sunderashan, Chairman of FMC, the proposal will be based on a report prepared by an internal committee of the commission and will be forwarded to the Union Government and Reserve Bank of India.

Mr Sunderashan was in the city to participate in the 48th annual general meeting of the East India Jute & Hessian Exchange. He clarified that only the Union Government would decide on the participation of the mutual funds and financial institutions. Addressing jute brokers, he said the main concern of the FMC and the Union Government would be dissemination of information on the prices of the commodities across the country to all the farmers and investors.

So, a pilot project in Gujarat covering 300-400 mandis, has just started. The project, he said, was being funded jointly by the Union and State Governments.

"The project would monitor every mandi which would have the price tickers of the three multi-commodity exchanges. We can arrange similar pilot projects if other State Governments are interested," he said.

The FMC was critical of the settlement of spot prices on the delivery date. He agreed that there were various mechanisms across all commodity exchanges but the FMC was actively trying to evolve a unitary method after consulting all the parties.

"If we cannot evolve any such mechanism then there should be mandatory delivery on the unsquared position on the delivery date. It should be done in a gradual manner. We have found that most of the disputes arise from the settlement of the spot prices," he said.

FMC is also considering total abolition of the changes in the specifications during a contract period. According to Mr Sunderashan, whatever premium or discount one has to offer should be made before the contract period.

He criticised the unhealthy competition among the multi-commodity exchanges. In this context he said that there cannot be any difference in the transaction cost among the commodities in a particular exchange.

Regarding the index and derivative trading in the commodity exchanges, he said there was a need to amend the Forward Contract Regulation Act.

Talking about FMC, he said, more technical staff has been recruited and it was gearing up to become an autonomous body like the SEBI.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
FMC planning to abolish changes in futures contract specifications

Wheat prices likely to be steady

Maharashtra wants ban on kesari dal to go

Supply glut

Karnataka to market organically grown items under `Jaivik'

More loads to carry

Spot rubber prices move up further

Bajaj Hindusthan board okays 55% stake in Pratappur Sugar

Shree Renuka Sugars plans IPO to fund Rs 128-cr expansion

Simbhaoli Sugar rights issue opens on Sept 9

Quality tea stirs industry revival

Coffee output may be hit on dropping

On the wrong side of the fence