The government has decided to cap the number of national commodity exchanges at eight to foster sustained growth of the commodity futures market.
"The Consumer Affairs Ministry in consultation with the sector regulator FMC has decided to allow only eight commodity exchanges to function at the national level," a senior official told PTI.
At present, four national exchanges -- MCX, NCDEX, NMCE and ICEX are operating at national level, while the rest two -- Ahmedabad Commodity Exchange (ACE) and the Universal Commodity Exchange (UCE) are yet to be launched.
Recently, Gontermann Peipers (India), promoted by Pramod Mittal of the Ispat group, has placed an application with FMC for setting up a national commodity exchange.
The Consumer Affairs Ministry frames policies for commodity futures market, while the Forward Markets Commission (FMC) regulates the functioning of four national and 19 regional exchanges.
"If UCE and Gontermann's get permission from FMC, then there would be a total of seven national commodity exchanges in the country," the official said, noting that the number of national commodity bourses are higher as compared to three stock exchanges in the securities market.
Though there is no such cap for stock exchanges in the equity market, the regulator Securities and Exchange Board of India (SEBI) has permitted only NSE, BSE and MCX-SX to function at the national level, the official said.
Meanwhile, an FMC official said: "It was felt that the mushrooming of national commodity exchanges would not be a good sign as quality growth was more necessary than just having a mere number of exchanges."
So, it was necessary to put a cap as there was rush of applications to set up a national commodity exchanges in the last few months, the official said.
The official further said that the Ministry has also decided to set up a committee to review the performance of the existing national commodity exchanges.
According to FMC, the turnover of 23 commodity exchanges was a record Rs 70 lakh crore in 2009 and is expected to rise further by 15 per cent to Rs 80 lakh crore this year-end.