Bourses' turnover up 20% in a day

MCX futures turnover up 19.58%; NCDEX up 20.54%; NMCE up 3.48%

Domestic commodities futures turnover touched Rs 25,276 crore today, a rise of Rs 4,167 crore, or 19.74 per cent, from its previous close, following huge volatility in gold and silver prices.

MCX's turnover, at 11:30 pm IST, touched Rs 17,987.65 crore from the previous day's Rs 15,042.27 crore, a rise of Rs 2,945.38 crore.

Other major exchanges were the National Commodity and Derivatives Exchange (NCDEX) with a turnover of Rs 6,574.58 crore, compared with Rs 5,453.94 crore on Wednesday, and the National Multi-Commodity Exchange's (NMCE's) turnover at Rs 335.39 crore, compared with Rs 324.10 crore Wednesday.

On Thursday, overseas spot gold fell $24.5 a troy ounce and silver dipped $2.33 a troy ounce from their respective previous closes, which led to huge volumes on the domestic futures also. Further, the day witnessed huge volatility in gold and silver contracts, thereby forcing exchanges, like Comex, DGCX and MCX to raise margins.

On Thursday, MCX had introduced special margins of 2 per cent on its Gold June contract and 3 per cent on Silver May contract, with effect from 5 pm IST.

Market players expect futures market turnover to touch new highs in the current financial year as investors are keeping an eye on the increasing opportunities the sector is likely to offer.

"Many investors are eyeing for an opportunity to shift a segment of their portfolio into commodities. An almost quadrupled year-on-year turnover is indicative of good opportunity," said S Kannan, senior analyst with Sharekhan Commodities. "In 2005-06, the commodities futures turnover stood at Rs 21,34,471.47 crore compared with Rs 5, 71,759.56 crore in the corresponding period previous year," said Anupam Mishra, director with the regulator Forward Market Commission.

The regulator is also considering setting up an Investor Protection Fund to help safeguard the investor's interest, in addition to working out guidelines for brokers and the exchange members. This set up will help increase in transparency in the futures market and lead to a rise in investor faith, said a senior FMC member.

Consumer affairs secretary L Mansingh is confident that the amendment of the Forward Contracts (Regulation) Act, 1952 will be cleared in the next session of the Parliament. "We were able to table it in one of the Houses in the Budget session. Also, the standing committee has expressed interest and we feel its unlikely to be delayed further," said Mansingh.

This amendment is expected to empower the FMC by giving it "functional and financial autonomy", as FMC chairman S Sundareshan had earlier put it.

The proposed amendments will also provide for setting up of Forward Markets Appellate Tribunal on line of Security Appellate. The amendments will enable FMC to become an independent and autonomous body on the lines of Securities and Exchange Board of India.

Currently, the regulator is an arm of the department of consumer affairs.

Further, the amendments will address issues like options trading in commodities, redefine commodities to include energy and weather and push forth de-mutualisation of regional exchanges.