The Hindu Business Line : President clears forward contracts amendment ordinance

The FMC will now have ‘search and seizure’ rights, besides power to levy penalty, regulate intermediaries such as collateral manager, a clearing house, introduce options trading and derecognise and supersede associations.

Our Bureau

Mumbai, Feb. 8 The Forward Contracts (Regulation) Amendment Ordinance to provide autonomous status to the commodity market regulator Forward Markets Commission (FMC) has been promulgated by the President, Ms Pratibha Patil.

With the enactment of the ordinance, the FMC will now have ‘search and seizure’ rights, besides power to levy penalty, regulate intermediaries such as collateral manager, a clearing house, introduce options trading and derecognise and supersede associations.

“Whenever the Commission considers it expedient, it may, by order in writing, direct any recognised association to make any rules or to amend any rules made by the recognised association within such period as it may specify in this behalf,” the ordinance said.

The Commission will have powers to supersede governing body of recognised association and suspend or cancel the certificate of registration for six months after issuing a show cause.

“Without prejudice to the foregoing provisions of the Act, the Commission shall, in exercise of its powers or performance of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time. The decision of the Central Government, whether a question is one of policy or not, shall be final,” the ordinance said.

The Central Government will have powers to supersede the commission, it added.

Power to levy penalty

If an intermediary fails to enter into an agreement with the client as prescribed by the FMC, he shall be liable to a penalty of up to Rs 5 lakh (or Rs 20,000 per failure).

Intermediary failure to redress clients’ grievances will attract a penalty up to Rs 5 lakh.

Penalty for insider trading will be of Rs 25 lakh or three times the amount of profits made out of insider trading, whichever is higher.

If any person indulges in fraudulent and unfair trade practices in commodity derivative will be liable to a penalty of Rs 25 lakh or three times the amount of profits made out of such practices, whichever is higher.

Penalty for failure to comply with directions of Commission will be liable to pay a penalty not exceeding Rs 2 lakh for each day during which such failure continues which may extend to Rs 5 lakh.

The Investigating Authority can order imprisonment up to one year or fine Rs 1 lakh or both any person who refuses to furnish details or fails to appear before the authority.

“The Appellate Tribunal is empowered to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.”

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