Commodities markets regulator, the Forward Markets Commission (FMC), has recently been in the news over the proposed move to merge it with Securities and Exchange Board of India (Sebi).
In an interview with FE?s Nikita Upadhyay, chairman FMC, BC Khatua, underlined the difference between the capital and commodities market and also touched on other issues like extending the suspension of sugar futures (which will come up for review this month). Excerpts:
What is your view on the issue of a common regulator? How would it help the market?
There were reports which said a turf war between Sebi and FMC. Let me clarify by saying that there is nothing like that. The issue rather debate is dead and gone. The question is if this had a positive and significant impact or would it be beneficial to continue the same way by imparting more powers.
The debate has its merits and demerits. People behind the debate must understand that FMC is not a by gone institution but a one created in the by gone era and is as modern as any other market. There is a vast difference in the way of operation of a commodity and capital market.
There have been reports about extending the ban on sugar futures (the newest to join the long list of commodities that have been banned from futures trading from time to time). What?s do you have to say on this?
Right now the market is volatile and the sugar has been banned from trading. Supply side is under constraint and we will continue to import it.
We will have to work like this for some more time. When we have domestic shortage coupled with international shortage then we have a major problem at hand.
We will have to wait and watch for the next year?s crop either domestically, internationally or both, before taking a call on lifting the suspension.
For the time being we will continue with the same (suspension of sugar futures).
How do you see the growth of the futures market going ahead?
The biggest problem at our end today is the manpower. What we also need is more focused regulator with more powers, physical market better equipped and closely integrated with the future market on the delivery day.
How many exchanges can the market accommodate?
Healthy competition in the market is always good for the traders. We have three different exchanges running already but they all had their different strengths. There are hardly one or two commodities which are equally traded and distributed in all the exchanges.
There is a huge scope for further growth and a healthy competition will ensure trader?s welfare. In a country like India we have place for about five to six exchanges.
Beyond this number the market would be too crowded. The fifth exchange is to be in Ahmedabad. It?s already up and running but we will be converting it into a national exchange.