‘Move neither in the interest of the exchange nor the industry’.

“We have also given an option to approach the regulator again in case if gets new findings to support its decision.”

Suresh P. Iyengar

Mumbai, Feb. 25 Following the Bombay High Court order, commodity market regulator Forward Markets Commission (FMC) heard National Commodity and Derivative Exchange of India (NCDEX) proposal to reduce transaction fee but rejected the move.

Giving option

Mr Rajeev Agarwal, Member, FMC, said after hearing NCDEX argument (post-Bombay High Court judgement), the Commission was convinced that the action of NCDEX to reduce transaction fee was neither in the interest of the exchange nor the industry as a whole.

“We have also given an option to approach the regulator again in case if gets new findings to support its decision,” he added.

NCDEX circular

NCDEX officials could not be contacted for comments. However, the exchange in its earlier circular to announce the withdrawal of reduced transaction fee after the Bombay High Court judgement said: “The trading and clearing members of the Exchange are hereby informed that the circular dated January 28, has been kept in abeyance by the Exchange with immediate effect without prejudice to any right of the Exchange to seek any further judicial or non-judicial remedy as advised by legal advisors.”

Moving court

When asked whether the exchange can move the court again, Mr Agarwal said: “It is for the exchange to decide on that. As far as we are concerned, the case has been disposed of unless and until the exchange comes up with new argument”. NCDEX had moved the Bombay High Court against FMC’s ruling to keep its decision to reduce transaction in abeyance.

After its move to reduce transaction fee in January was rejected by FMC, NCDEX in February came out with a revised offer of uniform transaction fee of Rs 3 for a lakh for all commodities traded from 10 am to 5 pm and 5 paise for a lakh in the second session between 5 pm to 11 pm. FMC had ordered to keep both the proposal in abeyance as it wanted to study the impact of the decision on the entire commodity eco-system. Delivering the judgement on February 5, Chief Justice Dr D.Y. Chandrachud said that these are important and larger issues (reduction in transaction fee and its implication) relatable to the economy and commercial principles which should be examined properly by an expert body and judicial interference preventing such a process would neither be just nor fair. “We do not find any merit in this (NCDEX) writ petition and dispose of the same at the admission stage itself, however, with a direction to respondent no 2 (FMC) to deal with the matter expeditiously and in any case not later than two weeks from the date of pronouncement of this judgment. No order as to costs,” the judgement.

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NCDEX moves HC against FMC

(This article was published in the Business Line print edition dated February 26, 2009)
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