Small bourses fear FMC norm may hit autonomy

The recent Forward Markets Commission guidelines in respect of regional exchanges taking membership of national commodity bourses will lead to the former losing their autonomy, said officials of regional exchanges.

Regional exchanges are not in favour of floating a new entity for taking membership of national exchanges.

"Such a proposal is suitable only for those regional exchanges which are not able to get adequate volumes in the commodities that they offer," a senior official of Indore-based National Board of Trade said.

"In our case, we have a superiority in refined soyoil futures and are not keen to float a new company." NBOT offers contracts mostly in soybean derivatives, but the maximum volume is derived from refined soyoil.

FMC has laid down the rules for regional commodity exchanges taking up institutional membership of two national exchanges""The National Commodity and Derivatives Exchange of India, and the Multi Commodity Exchange of India.

Senior officials of most regional exchanges are unanimous in the view that as they get adequate volumes by trading in one or two commodities, they would not like to go for a tie-up with national exchanges.

"The terms and conditions given by the FMC is not acceptable to us as we would lose our individual entity," said Shyam Agarwal, CEO, of Delhi-based Rajdhani Oil and Oilseeds Exchange.

Rajdhani Oil and Oilseeds Exchange trades primarily in mustard, and its average daily volume is 1,600-3,000 tonne. Rejecting any move to float a new company, a senior official of Kochi-based First Commodity Exchange of India said the exchange would instead look to offer more contracts rather than aligning with national exchanges.

"We are looking at offering contracts on spices and rubber to cater to the local needs of Kerala," P Alexander, chairman of First Commodity Exchange of India said.

Though most regional commodity exchanges are not in favour of floating a new company for taking institutional membership of national exchanges, some wanted further clarification on the guidelines.

"We would like to have further clarifications on position limits, risk management and responsibility and also position limit of non-member clients before taking any decision on floating a new entity," a senior official of Ahmedabad-based Ahmedabad Commodity Exchange said, adding that day traders would be hit the hardest if any regional exchange ties up with a national exchange.

FMC has kept a limit of Rs 5 million as membership fee for regional exchanges and another Rs 750,000 as entry fee.

"These conditions are stringent and our exchange is against floating a new company for taking new membership of national exchanges. Instead, we have decided to start a new company which would have all the benefits of a national commodity exchange," M P Singh, a senior official of Ghaziabad-based Chamber of Commerce said.

Chamber of Commerce offers contracts in mustard and gur, and is one of the leading regional commodity exchanges in North India.

It daily average volume in mustard is 12,000-15,000 tonne and 4,000-6,000 tonne in gur.

Recently, Rajkot Seeds, Oil and Bullion Merchants Association decided to float a new subsidiary for taking institutional membership of MCX.

IDENTITY CRISIS
Regional exchanges are not in favour of floating a new entity for taking membership of national exchanges

Senior officials of most exchanges are of the view that as they get adequate volumes by trading in one or two commodities, they would not like to go for a tie-up with national exchanges