The regional commodity exchanges would not be permitted to trade in totally unrelated commodities in relation to their domain knowledge and market proximity.
Hyderabad, Oct. 7
THE Forward Markets Commission (FMC) is contemplating to allow the 21 regional commodity bourses across the country to trade in more number of commodities.
The regional bourses are currently permitted to trade in restricted number of commodities specific to their region. At present, only the three national commodity exchanges are permitted to trade in multiple commodities.
The FMC has finalised a set of stringent guidelines based on which the regional commodity bourses would be permitted to deal in other commodities where they have reasonable domain knowledge and proximity to physical markets, the FMC Chairman, Mr S. Sundareshan, told newspersons here on Friday.
However, the regional commodity exchanges would not be permitted to trade in totally unrelated commodities in relation to their domain knowledge and market proximity, he said.
"We do not expect a situation where the regional commodity exchange in Kochi trades in steel or copper. We would consider permitting Kochi commodity exchange, dealing in pepper and cardamom, to trade in rubber. The commodity exchanges in Gujarat dealing in castorseeds can be permitted to deal in groundnut," he said.
Stating that the FMC has received a few applications from the regional commodity exchanges seeking permission to deal in few other commodities, Mr Sundareshan said none of the regional commodity exchanges was asking permission to deal in all the commodities.
On the prerequisites for permitting the regional bourses to deal in more number of commodities, he said the regional bourses would be asked to set up electronic clearing system, ensure back-office automation and float proper trade guarantee fund. The objective of these guidelines is to ensure market and financial integrity, he said.
"These guidelines will be published soon. We are also going to make it mandatory for all the members of the commodity exchanges across the country to get registered with the FMC before December 31, 2005," Mr Sundareshan said.
Stating that the business volumes of the Indian commodity markets during the first five-and-a-half months period of the current fiscal have touched Rs 7.02 lakh crore ($180 billion) as against Rs 5.71 lakh crore ($130 billion) recorded during the full year 2004-05, he said the volume for the full year 2005-06 is expected to reach around $290-billion, which is more than 50 per cent of Indian GDP.