Door opens for option and index trading in commexes

Written by Dhimant Bhatt | Mumbai, Jan 27 | Updated: Jan 28 2008, 05:02am hrs
The new legislation passed by the Parliament last week to give autonomy to Forward Markets Commission will help to bring more transparency in the commodity futures markets.With more powers to the regulator, it will bring more new products such as Options and Indices trading and will be able to curb excess volatility and manipulation in the market.

It will also give powers to the regulator to increase the new set of market participants in the markets like Banks and Mutual funds, commodity experts said.

The new legislation allows launch of new products like Options & Indices. Participation of Banks, FIIs and Institutional investors was also in some way linked to the approval of this bill and with autonomy of FMC we believe, that these institutions will now be allowed to participate in commodity futures market, Joseph Massey, deputy managing director, MCX said.

The regulator (FMC) may streamline the entire functioning of futures commodity markets as it will be conferred power to recruit its staff. The commission will be able to levy fees to fund its own budget.

I think the regulator will get more teeth to bring more transparency in the commodity futures market and more corporate governance, Shyamal Gupta, head-institutional business, Kotak Commodity Services said.

The regulator can increase its members strength from four to nine. Also, the regulator can levy fees and create FMC General Fund and this fund will be used for management of the affairs of the commission.It is very positive development for the commodity sector. It was long over-due. With the new legislation, the regulator will get autonomous status - both functional and financial.