The Hindu Business Line : Ban on wheat, rice futures may go by January: FMC chief

Kolkata, Dec. 12 The Forward Markets Commission (FMC) plans to resume futures trading in wheat, rice, tur and urad latest by January 2009. Trading was suspended in all four commodities by the Union government since January (for tur and urad) and February (for rice and wheat) 2007 as an anti-inflationary measure.

The ban, initially dubbed as a temporary measure, has continued for almost two years, against the recommendations of the Forward Markets Commission.

“I am confident that we will be able to resume trading in all four commodities. We will take a decision in this regard within the next couple of weeks,” the FMC Chairman, Mr. B. C. Khatua, told newspersons at a press conference here on Friday. “The ban may be lifted either in the end of December or January,” he added.

‘Govt in favour’

The FMC Chairman clarified that with the easing of inflationary pressure and a comfortable stock position, the Union Government is in favour of resuming trading in these commodities. “The Union Government is so far agreeable to our proposal. However, we will take their final view before withdrawing the ban,” the FMC Chairman said.

On the performance of rubber, soya oil and potato, on which trading ban was lifted recently, he said regaining old volumes would take some time. “It may take place when rice, wheat, tur and urad will come back into the market.”

Uniform contracts

Earlier, elaborating the outcome of his meeting with members of national commodity exchanges in the city, he said members demanded uniform contract designs by all exchanges to enable seamless trading of commodities.

This, if allowed, will allow investors in a particular commodity in one exchange to take delivery of the product from another exchange. “Seamless trading is followed in commodity exchanges of developed countries. We will definitely favour such practices in India. However, considering the quality concerns, it is not easy to introduce,” he said.

“We are now planning to introduce uniform contracts and seamless trading in one or two commodities on a pilot basis,” he added. However, FMC did not set any timeline to introduce the new instruments.

Electronic spot trade

Mr Khatua felt that the Union Government’s move to implement the Warehousing (Development & Regulation) Act 2007 has created an opportunity to allow electronic spot trade of warehouse receipts in electronic exchanges by passing the APMC act.

Such spot trade on receipts and the electronic futures markets should be regulated by one regulator. The FMC has already submitted its proposal to the Union government.

More Stories on : Commodity Exchanges | Rice | Wheat

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