The Hindu Business Line : FMC plans fresh set of investment norms

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Hyderabad Jan 22 The Forward Markets Commission (FMC), a regulatory authority under the Ministry of Consumer Affairs and Public Distribution, is set to come up with new guidelines to pave way for investments, including by FIIs and mutual funds.

Alongside, the FMC, which acts as a regulator for commodities and derivatives across 21 regional exchanges, expects to play an independent role for the commodities market, similar to the TRAI and the IRDA.

The FMC Director, Mr Anupam Mishra, said: "The Forward Contracts (Regulation) Act, 1952 has now become archaic and is coming up in a new form, factoring the market changes and for better financial administration. We expect this enactment to come into being early next fiscal."

Mr Mishra said the first nine months of the current fiscal have been eventful and the commodity exchanges transacted business of over Rs 27 lakh crore against Rs 21 lakh crore last fiscal.

"We would like to open up the commodities markets further but a big constraint has been lack of commodity domain knowledge that can provide information on price signals in crop patterns."

The NCDEX Managing Director, Mr P.H. Ravi Kumar, said the futures trading in commodities on an online commodity exchange such as NCDEX has brought about transparency and fair price on account of largescale participation of entities associated with different value chains.

This reflects the views and expectations of a wider section of people in relation to a particular commodity.

NCDEX has emerged as an effective platform for price risk management for all segments of players ranging from producers, traders, processors, exporters and importers to end-users of the commodity.

Mr Ravi Kumar said: "The effort is on to bring even small and marginal farmers into the fold. Logistics is one issue is hindering bringing them on for trading. If a truck has to be transported it would have to take about 10 tonnes.

A small farmer cannot handle this alone, nor can we transport half the truck. To address this, it is proposed to form teams of 5-6 traders for wheat and 7-8 in the case of pulses."

Mr Ravi Kumar also said that it has become difficult to distinguish between a farmer and a trader since in some cases they act as both. In order to bring about such a distinction, Kisan cards are being considered.

On private investments in the exchange by Crisil, ICICI Bank, Iffco, LIC, Nabard, the NSE, PNB, Canara Bank and Goldman Sachs, Mr Ravi Kumar said: "It is as per law as there is nothing forbidding investment in NCDEX."

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