Financial Daily from THE HINDU group of publications
Saturday, Oct 22, 2005
Financial Daily from THE HINDU group of publications Saturday, Oct 22, 2005 |
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Agri-Biz & Commodities
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Commodity Exchanges Allowing MFs, FIIs in commodity futures — More regulatory mechanisms need to be in place, says FMC Our Bureau
Kochi , Oct 21 THE Forward Market Commission (FMC), which supervises commodity exchanges in the country, on Friday said more regulatory mechanisms need to be put in place before mutual funds and FIIs are allowed to invest in commodity futures. "The market (for commodity futures) is new. Before we allow new entrants, we need proper regulatory mechanisms in place," said Mr S. Sundareshan, Chairman of FMC. Speaking to newspersons, Mr Sundareshan said an internal committee of the FMC was ready with report on the proposal to allow mutual funds and FIIs into commodity futures. He also said the Finance Ministry, SEBI, and RBI must give their views on the matter before a decision is taken. Commodity exchanges have been demanding that mutual funds and FIIs be allowed to participate in the commodity futures market. A bill to amend the Forward Contract (Regulation) Act, aimed at bestowing more powers and autonomy to the FMC, is likely to be introduced in the winter session of Parliament. Mr Sundareshan said in the first half of the current fiscal, total volumes traded at all the commodity exchanges in the country stood at $280 billion (Rs 7.8 lakh crore), more than double the total trade of $130 billion in the previous fiscal. "People are trying to protect themselves against risk and are also discovering price (by trading in commodity futures). This is the innate entrepreneurship of the Indian mind." The three large exchanges - NMCE, MCX, and NCDEX - accounted for 85-90 per cent of the volumes, with the rest of 21 exchanges accounting for the rest. On the future of smaller regional exchanges, Mr Sundareshan said that there is no intention on the part of the FMC to wind up these exchanges. On the contrary, the FMC would encourage them to upgrade technologies and introduce modern management practices.
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