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The Government is likely to issue an order on Thursday to bring the Forward Market Commission (FMC) under the Finance Ministry.
FMC regulates commodity futures market and has now also been empowered to look after National Spot Exchange Market (NSEL) payment crisis.
“The Prime Minister is believed to have signed the file. Now the President is expected to notify changes in the allocation of Business Rules and the FMC will under administrative control of the Finance Ministry,” a senior Government official told Business Line .
At present, FMC is under the Consumer Affairs Ministry.
With this all the financial sector regulators will be under the Finance Ministry. Since commodity and equity markets are interlinked and equity market is regulated by the Securities and Exchange Board of India (SEBI), such a move will help in better coordination among the regulators.
This move is seen as the fall out of the National Spot Exchange Limited fiasco.
Though, NSEL is not regulated by the FMC, but it has oversight power. And now, the FMC has been empowered to supervise settlements of all outstanding one day forward contracts at NSEL. All decisions or order in this regard will be binding on NSEL.
The official said that ultimately FMC will be a part of the capital market regulator SEBI.
“Since the Financial Sector Legislative Reforms Commission (FSLRC) has suggested that all financial transactions (barring some specific things for RBI) are to be brought under one regulator and FMC is also looking after a kind of financial transaction, that is why we will see FMC a part of SEBI in future,” the official said.
FMC becoming a part of SEBI will require repealing Forward Contract Regulation Act (FCRA) and bring amendments in SEBI Act. This will take time, the official explained.
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