The Hindu Business Line : Commodity bourses to move towards compulsory delivery

ALL the three multi-commodity exchanges and the representatives of seven-eight single-commodity regional exchanges on Tuesday unanimously agreed on three major issues - continuance of existing trading hours, to move towards compulsory delivery mechanism and adopt uniform system of margin, Mr S. Sundareshan, Chairman, Forward Markets Commission (FMC), said.

These decisions were taken at the meeting of the co-ordination committee of the exchanges held here.

Mr Sundareshan said FMC and the exchanges would work together innovative contracts (like T-2 and weekly contracts of gold) subject to the condition that these would be in commodities of national importance.

As a medium-term goal, compulsory delivery would be insisted upon. All the exchanges would move towards compulsory delivery in outstanding positions and it would be emphasised for new contracts, he said.

The permission for a contract would also have a time frame for launch. With regard to large number of contracts being introduced by the multi commodity exchanges, it was decided that they would launch the contracts in a time-bound manner. They would also make suggestions on steps to be taken in regard to non-operational contracts, he added.

All the exchanges would continue with the existing timing and they also decided that unhealthy competition amongst the exchanges would be avoided. The single commodity exchanges would be allowed to function in a fair way.

Special margins imposed by FMC would be implemented on real time basis and would be on all contracts rather than on the spread positions. It was also decided that limits for hedging would be higher than normal limit. FMC would take a decision in this regard after getting suggestions from the exchanges, he said.

Mr Sundareshan said important issues such as effective marginsystem and limit on open positions of members/clients would be referred to the Risk Management Group set up under the leadership of Dr J R Varma.

He said all the exchanges would adopt a mechanism for monitoring the client level position.

All the exchanges supported the move to register the members with FMC, he said.

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