Do not resort to 'short cuts', FMC to commodity brokers

Written by Agencies | Mumbai, August 31: | Updated: Sep 1 2007, 01:28am hrs
In a straight talk, the commodities marker regulator, the Forward Markers Commission, asked brokerage houses not to resort to short cuts to increase their capital base.

"They (exchanges and their members) should educate their clients on risks and rewards involved in commodity trading so that the trade growth is not achieved through short cuts but through a steady growth of awareness and responsible trading on a sustainable basis, FMC Chairman B C Khatua said at the meeting of west zone members of the three national level commodity exchanges - MCX, NCDEX and NMCE.

Exchanges and their members should not only strengthen their capital base but also put in place a comprehensive and transparent governance structure, he said, adding there was a need to strengthen the corporate governance structure of the intermediaries to generate market confidence.

He also said commodity futures market was preparing itself for the next phase of growth which would see greater participation of hedgers, corporate entities, exporters, processors and producers, according to an FMC release.

There is a need for a more stringent and responsive regulation in order to ensure greater participation in the market, Khatua said.

"Such regulation would increase the confidence of market participants in the market, maintain financial and market integrity and discourage malpractices in the market," he said.