Commodity stock exchanges end 2012 with Rs 174-trillion business

Dec 31 2012, 19:32 IST
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SummaryForward Market Commission's steely resolve to curb speculation has copped much blame.

Commodity stock exchanges: Commodity futures market remained subdued in 2012 with turnover stagnating at last year's level of Rs 174 trillion and the government's bill to strengthen the regulator FMC also getting stuck in Parliament.

The Forward Market Commission's (FMC) steely resolve to curb speculation in various agri items like guar futures and the MCX becoming the country's first commodity exchange to be listed were some of the positives during the year.

"The turnover of the exchanges has been declining every fortnight, especially in bullion, but the cumulative turnover would be close to the 2011 level." Forward Markets Commission Chairman Ramesh Abhishek said.

The year 2012 put a break on growth in the turnover of the commodity futures market, which had been growing rapidly in the last few years. In 2011, turnover grew by 66 per cent to Rs 174 trillion.

Stating that drop in the turnover of 20 commodity bourses was not a "major concern", Abhishek said the regulator's prime focus through the year was to make volumes more relevant and ensure a balance in speculation and hedging activities.

"We saw much better regulatory measures in place this year to curb volatility in prices," he said, highlighting steps like imposition of special margin and cut in open position limit in agri items like guar, pepper, turmeric and soyabean, among others, in this regard.

Strengthening of investors protection fund, staggered delivery system, starting of SMS and email alerts to individual traders, ban on algo/ high frequency trade in mini and micro contracts and mandatory audit of exchanges – helped curb speculation and enhanced investors's confidence, he said.

In March, FMC banned trading in guar futures to check price volatility. It also took stringent action against couple of commodity brokerage firms for violating laws.

"The delisting of guar contracts has definitely affected the market sentiment but that is only a temporary phenomenon," NCDEX Managing Director and CEO R Ramasheshan said.

FMC could have done more had the government ensured the passage of the Forward Contract Regulation Act's Amendment Bill (FCRA) this year to strengthen the commodity regulator on the lines of SEBI.

"It was definitely a missed opportunity. The markets have been waiting for the passage of the amendment to the FCRA bill and it would have been a nice ending to 2012 if the bill had been passed," Ramasheshan said.

Notwithstanding disappointment over FCRA bill, the commodity futures market took solace with MCX, the largest commodity exchanges, becoming the first commodity

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