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Suresh P. Iyengar

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Mumbai, Feb. 16 Chances of relisting urad, tur, wheat and rice for futures trading appear to be bright with the Forward Contracts (Regulation) Amendment Ordinance empowering the market regulator, Forward Markets Commission (FMC), to decide on the commodities that can be allowed in futures trading.

Earlier, futures trading were permitted for only 100 notified commodities. “Section 15 of the ordinance has done away with the need for a Government notification on commodities to be traded on the futures exchange and powers are vested with FMC to take a decision,” said Mr Ravinder Sachdev, Head-Legal, NCDEX.

The commission will be writing to the Government on the need to relist the banned commodities. The Government banned urad and tur futures trading in January 2007, while the Union Finance Minister, Mr P. Chidambaram, announced the ban on wheat and rice during his Budget speech on February 28.

However, FMC is not in a hurry to enforce its new powers. “We will apprise the Government on the need to lift the ban. Various organisations have moved us on the same. A decision would be taken in consultation with the Government,” said Mr Rajiv Agarwal, member, FMC.

Investors say more than the recent FMC moves to encourage market participation, removing the ban on the four commodities will instil more confidence in futures trading. FMC has recently raised the open interest position and daily price limits on 34 agriculture commodities to boost market participation.

“Relisting the banned commodities for futures trading is a politically sensitive issue. Once the ban is revoked, it will improve the sentiments in the markets. It has been proved beyond doubt that the ban has not brought down prices of these commodities at the retail level,” said Mr Sushil Sinha, Assistant General Manager, Karvy Commodities.

The commission has also got powers to decide on the proposals for a new exchange. State-owned MMTC and IndiaBulls Financial Services Ltd combine have moved FMC to launch a new commodity exchange.

More Stories on : Commodity Exchanges | Pulses | Regulatory Bodies & Rulings | Foodgrains

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‘FMC can relist futures trading in pulses, grains’

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