The Forward Markets Commission (FMC), the commodity derivatives markets regulator, has asked leading futures exchanges to send recommendations in three weeks on the proposal to levy a minimum base capital (MBC) for members, in line with the capital market.
Exchange officials unanimously agree with the regulator that there is a need to specify an MBC to protect the interest of small traders in case of members default. After the exchanges respond, FMC may levy an MBC as recommended. Currently, the Ahmedabad-based National Multi Commodity Exchange accepts a deposit of Rs 50,000 as MBC. No other exchange has such a mandatory norm.
In a meeting with leading exchange officials on Friday, the FMC decided to keep the initial margins in each commodity unchanged, which varies from five per cent to nine per cent.
Members felt there was no need to increase this margin. However, special margins can be levied at the exchange’s discretion depe-nding upon the volatility in each commodity.
Apart from these, the regulator has also prepared a uniform inspection manual for brokers. “Today, an exch-ange inspects a portion of accounts and other traded papers of members while another exchange inspects it thoroughly. After this manual, the inspection system will be uniform,” a participant said.
At least once a three years, brokers’ accounts wo-uld be inspected, he added. The manual was already dispatched to exchanges on Friday.