The Forward Markets Commission (FMC) will soon take up the issue of allowing banks to participate in commodity futures as some banks have already started providing finance to commodities that are hedged on comexes. |
Federal Bank has financed up to 85 per cent of the price of some of the plantation commodities hedged on comexes. The bank is planning to finance up to 90 per cent. |
|
"If banks can take this view "" of giving finance with liberal margins for hedging commodities "" it is a logical follow up for them to hedge the commodities themselves on comexes," said B C Khatua, chairman, FMC. |
|
FMC is promoting the idea of aggregators for helping small farmers to hedge their crops on comexes. The commission today held a meeting with potential aggregators such as state- and national-level marketing federations and market intervention agencies in this regard. |
|
Aggregators act on behalf of farmers who are not comfortable in hedging their crops on exchanges either for want of knowledge or because the quantities are small. FMC was also planning to register such aggregators and adopt a liberal regulatory frame work, said Khatua. |
|
Hafed, Nafed and other such institutions have shown interest in becoming aggregators. In Kerala some cooperative societies are playing the role of aggregators. |
|
At today's meeting, the issue of non-availability of options trading was also raised as it is an important tool for hedging with minimum cost. |
|
Participants also called for passing the the bill to amend the FCR Act faster as |
|
FMC's permission for granting options trading hinged on it. |
|
Once the bill is passed, FMC can adequately regulate various intermediaries such as exchange members, warehouses, assayers, depositories and aggregators to guard the interests of small farmers. |
|
|
|