FMC to keep an eye on price volatility

Commodity market regulator, Forward Markets Commission (FMC), today said that it is keeping a close watch on any volatile price fluctuation and will take stern action against delivery defaulters.

"We are keeping a close watch on any volatile price fluctuation at the commodities exchanges. We will not hesitate to chip in when there is a persistent abnormal fluctuation," S Sundareshan, chairman of FMC, said here.

If price fluctuations in globally traded commodities get reflected at domestic markets, then there is  no problem, but if volatility happens due to manipulation by some traders and brokers, then FMC would definitely intervene, Sundareshan said.

As regards agricultural commodities, Sundareshan said: "we will allow maximum of 9% price fluctuations, not beyond that level".

The commision held a liberal view on internationally-traded commodities like gold and silver as regards to price fluctuations, Sundareshan said.

Referring to the highest-ever inter-day price volatility in silver a fews days ago, Sundareshan said "we are examining the reason behind such abnormal fluctuations and will take action soon in this regard keeping in mind the trader interests".

For defaulting in case of compulsory physical delivery, charging the 5% penalty is preferred - provided this norm is followed strictly - in order to ensure the success of the exchanges. Defaulters on physical contracts, however, ought to be banned, Sundareshan said.