For its autonomous existence, early June this year, the FMC had forwarded its recommendations to strengthen its operations on the lines of Sebi through a separate FMC Act.
This was aimed to help FMC take up the challenges of an effective commodity futures regulator in a liberalised economy that poses both the commodity and price risks for cross-section of players including corporates, exporters, traders and farmers.
However, the Parliamentary Standing Committee which met recently in New Delhi was of the opinion that the FMC needs to be strengthened by amendments of the existing FC(R) Act 1952 and not through an enactment of a new Act on the lines of Sebi.
The enactment and passing of the new act for FMC in the Parliament would be time consuming, which in turn could delay the strengthening process for the FMC.
Further, in the process of strengthening its activities, the FMC would require an annual grant of around Rs 10 crore from the government to be able to attract talent from the private sector and become an effective regulator.
Currently, it gets around Rs 2.5 crore annually to conduct its operations.
Also, the FMC’s existence is recognised only as part of the Forward Contracts (Regulation) Act, 1952, Section 3(1).
FMC is only part of the larger ministry of consumer affairs and public distribution which, under its umbrella, has three other departments — Bureau of Indian Standards (BIS), the Consumer Affairs Court (at central level) and the
super bazaars. Therefore, the recommendation for autonomy through a separate Sebi-like Act.
From the list of talent that FMC hopes to attract from the private sector to improve the functions of the commodity futures regulator includes legal, accountancy (chartered accountants) and even capital markets. The talent from capital market, for example would help interlink the two markets — the capital and the commodity futures markets.