After the successful re-listing of four major agri-commodities on all national commodity exchanges on Thursday, the Forward Markets Commission (FMC) has prepared a set of top priorities for the short-term. The three top priorities are the passage of Forward Contracts (Regulation) Amendment (FCRA) bill 2006, restoration of futures trading in the four banned commodities such as wheat and rice, and establishing a full governance structure in place after the passage of FCRA Act.
The commission has decided to take up these market-level reforms at the next round of structural changes for the entire commodity ecosystem. The FMC has already prepared a draft of rules to restructure and strengthen the commission with full powers.
About the restoration of four major agri-commodities, FMC chairman BC Khatua said that the commission has already sent a detailed analytical report to the government and expects early restoration of these commodities for trading. ?About the FCRA Act, the government will have to promulgate the set of rules and regulations once the amended act comes through. We have already prepared the draft rules and regulations and a major part of our work has been done. After the passage of the act, we will put the rules and regulations in place,? BC Khatua told FE.
The government has delegated most powers other than the powers for recognition, withdrawal of recognition and super-session of associations to the FMC.
At present, the FMC is an attached office of the ministry of consumer affairs, food and public distribution and it does not have adequate financial and operational autonomy. The FMC does not have adequate powers required for effective regulation of rapidly growing commodity futures markets. The proposed amendment seeks to confer upon the FMC all the delegated and non-delegated powers for effective regulation of the markets.
The proposed amendments seek to restructure and strengthen FMC on the lines of securities market regulator Securities and Exchange Board of India (Sebi).
?Our special focus would be to strengthen the framework of the physical market structure and strenghthen the hands of physical market players with special benefits towards farmers. I would like to bring in the structural change in the entire commodity ecosystem whereby physical market players get benefits from the presence of futures markets,? he said.
?I don?t mind if the futures market still remains somewhat smaller in size. At this point of time, I am not keen to expand the market at the cost of these objectives. I expect moderate growth in the futures market,? Khatua said.
Top Priorities
• Passage of Forward Contracts (Regulation) Amendment (FCRA) bill 2006
• Restoration of futures trading in the four banned commodities such as wheat and rice
• Establishing a full governance structure in place after the passage of FCRA act.
• Restructure and strengthen FMC on the lines of securities market regulator Securities and Exchange Board of India (Sebi)