FMC report on MFs, FIs role likely in two weeks

Forward Markets Commission(FMC) will submit its recommendations to the Reserve Bank of India (RBI) in two weeks on whether to allow mutual funds and financial institutions to trade on the commodity exchanges, Chairman S. Sundareshan said Tuesday.

An RBI committee has already placed a recommendation before the government to allow participation of banks in commodity trading and it is awaiting Cabinet approval, he said.

On allowing options trading in commodity indices, the FMC Chairman said it is not possible unless certain amendments are made in Forward Contract Regulation Act.

He said a proposal to accord total autonomy to Forward Markets Commission to regulate futures trading in commodity exchanges on the lines of the Securities and Exchange Board of India (Sebi) is awaiting government clearance.

"We are awaiting Union Cabinet's approval to the recommendations," he said.One of the major problems faced by the farmers is availability of information on commodity prices on various exchanges, Sundareshan said.

To a query, he said settlement of spot prices on various commodity exchanges on expiry of contracts has become a major problem. The FMC is trying to introduce a credible system at all the three major exchanges - MCX, NCDEX, and NMCE, he said.

The commission is also planning to introduce compulsory delivery of commodity on the day of delivery if the position is not squared earlier, he said.