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Mumbai June 6 The Chairman of the Forward Market Commission, Mr B.C. Khatua, has defined the dual role of the commission as a promoter and regulator of the commodities futures market.

"In a nascent market like India, the commission has to balance the act of promoting the markets by creating awareness and also regulating to control them," said Mr Khatua.

Absence of Hedgers

He expressed the need for deeper markets with participation from all stakeholders in the value chain, especially hedgers. "Absence of hedgers in the markets is the reason why the commodity futures markets have been misapprehended," he reasoned. However, he said while markets cannot function without speculators, there was no mathematical measure to define their presence either. Thus, he emphasised on producer participation in the futures market, especially in agricultural products. Given the fractional land holding, the Chairman suggested sizeable participation by NGOs, private limited companies or co-operative societies behalf of the farmers.

Interestingly, the Chairman spoke of global integration of markets for dealing with regional supply deficits. However, he did not comment on the ban on certain commodities. He pointed out that a committee has been appointed to look into the issue. He stated that supply demand do not affect futures markets they are merely messengers of the physical market conditions.

More Stories on : Regulatory Bodies & Rulings | Commodity Markets

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