The Hindu Business Line : ‘Futures trading will influence spot market’

Futures trading is bound to have an influence on the spot market, according to Mr Kailash Gupta, Managing Director of the Ahmedabad-based National Multi-Commodity Exchange of India Ltd (NMCE).

However, the prices on the futures and the spot markets are mutually complementary.

Asked if there was any mechanism to de-link the prices of spot markets and futures, Mr Gupta replied in the negative at a press conference. He also said futures would not depend on perception, but that the demand-supply situation would decide the prices.

The gestation of crop and the consumption period would also have influence on the futures market, he added. With the advent of futures trading, import and export duties on listed commodities would go as international prices would determine the price discovery locally.

Referring to agricultural commodities, he said that the crop patterns would also change over the years to achieve uniform quality. The NCME chief said convergence of settlement price with spot price on maturity represented the efficient price discovery, especially when the physical markets are fragmented and influenced by local dynamics.

More powers

Mr Bharat Tripathi, Director of the Forward Markets Commission (FMC), the regulator of futures trading, said the Centre was planning a Bill to provide more teeth to the commission.

The Bill would empower the FMC with authority to search, call and inform on complaints of irregularities and also take suo motu action.

Mr Tripathi said the FMC would protect consumer interests.