Financial Daily from THE HINDU group of publications
Saturday, Feb 04, 2006
Financial Daily from THE HINDU group of publications Saturday, Feb 04, 2006 |
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Regulatory Bodies & Rulings Agri-Biz & Commodities - Commodity Exchanges FMC gets tough with NCDEX on norms violation — Seeks action against official responsible for settlement price change of urad, chana Our Bureau
Mumbai , Feb. 3 THE Forward Markets Commission (FMC) has directed National Commodity & Derivatives Exchange Ltd (NCDEX) to relieve a top official from his duties immediately for recent violation of FMC norms. FMC has taken this action following its inquiry into the decision taken by the NCDEX for fixing the final settlement price (FSP) of channa and urad for January 2006 contract on the basis of the average of polled prices of the preceding five days including the expiry date. Last week, the commodity futures regulator had said that the decision taken by NCDEX on January 19, regarding final settlement price of channa and urad was contrary to the directions issued by the FMC to not change the terms of the contract during the currency of the contract without prior approval of the commission. The exchange allegedly changed the system for the settlement by taking an average of the last five days before contract expired. The person responsible should not be allowed to look after any core functions of the Exchange, FMC said in a news release. "This does not preclude action against other members of the management team," the release said. FMC has also asked the exchange to conduct an inquiry to find out whether any malafide intention was involved in the decision of changing the method of determination of FSP on January 19. The regulator has asked the exchange to complete the inquiry within a month. The exchange has also been asked to conduct an investigation on whether there was any manipulation of the futures market in these commodities. "This inquiry should be completed in 15 days," FMC said. The exchange has been asked to conduct a thorough investigation to find out whether there was an attempt to rig spot prices by its members/clients. This investigation should be completed within 15 days. The exchange has also been asked to identify systemic deficiencies in compliance systems; process of fixing spot rate and FSP; delivery system and grievance redressal system. FMC has asked the exchange to initiate action in these areas immediately.
Related Stories: More Stories on : Regulatory Bodies & Rulings | Commodity Exchanges
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