FMC cell drafting risk control rules

The Forward Markets Commission (FMC) has constituted a committee to draw up risk management practices for the industry and exchanges.

A second group has been set up to look into regulatory and operational aspects of participation by foreign institutional investors, mutual funds, non-resident Indians (NRIs) and overseas corporate bodies (OCBs) in the futures market.

The eight-member co-ordination committee comprising Padma Swaminathan, member of FMC as chairperson, and D S Kolamkar, director of FMC, as convener, also has members from Multi Commodity Exchange (MCX), National Multi Commodity Exchange (NMCE) and the National Commodity and Derivatives Exchange (NCDEX) Ltd.

The first meeting of the co-ordination committee was held today at FMC. It discussed widening of the equity base of the demutualised exchanges. The exchanges pleaded one year was too short a time for broadbasing their equity.

However, FMC was unlikely to compromise on this issue as the demutualisation process at Indore based National Board of Trade (NBOT) has caused uncertainty about the ownership pattern of the exchanges.

FMC was examining the ownership of NBOT following complaints of irregularities in allotment of equity.

Under the directive, the shareholding of "major public limited companies, financial institutions, state government undertakings, etc" have been capped at 30 per cent of the equity.

In the case of other public limited companies and institutions other than FIs, the limit was 10 per cent while exposure of private limited companies has been restricted to 5 per cent.