Bills on commodity futures on cards

The government proposes to introduce the Warehousing Development and Regulation Bill and make amendments to the Forward Contracts (Regulation) Act in the upcoming monsoon session of Parliament, said Union agriculture, consumer affairs and food minister Sharad Pawar on the sidelines of a seminar on commodity futures organised by Assocham on Thursday.

"We need to work towards promoting futures trading to newer heights in the immediate future. The government proposes to introduce a Bill in Parliament on warehousing development and regulation in the monsoon session," Pawar said. The monsoon session is scheduled to start on July 25.

"We are looking into various enabling issues pertaining to the standardisation and gradation, negotiability of warehouse receipts and development of modern warehousing infrastructure across the country," he added.

The minister said along with liberalisation and adoption of modern practices, the government is proposing to amend the Forward Contracts (Regulation) Act, 1952.

This will help make statutory provisions in tune with the time and also strengthen and restructure the commodities market regulator, Forward Markets Commission.

Pawar also said the proposed amendments will also provide for setting of Forward Markets Appellate Tribunal in the lines of Securities Appellate Tribunal (SAT).

At the seminar organised by Assocham, consumer affairs secretary L Mansingh said the amendments will enable FMC to become an independent and autonomous body like the Securities and Exchange Board of India (Sebi).

Currently, the regulator is an arm of the agriculture ministry.Further, the amendments will address issues such as options trading in commodities and redefine commodities to include energy and weather, Mansingh added.

On FMC's proposed regulation to make delivery of outstanding positions mandatory, Mansingh said, "Sincerely, it is a very debatable issue. Before making the physical delivery mandatory, a proper infrastructure needs to be put in place."

Earlier this month, the regulator had proposed a norm making physical settlement of outstanding positions compulsory in a phased manner.

FIIs, banks may be allowed

The government is considering participation of foreign institutional investors (FIIs) and banks in the commodity futures market and especially their role as aggregator.

Discussions are on with the Reserve Bank of India in this direction, said Sharad Pawar, Union minister of agriculture, and consumer affairs, food and public distribution. The RBI has set up a working group to study the feasibility of allowing these institutions, he added.

FMC chairman S Sundareshan, on the sidelines of the seminar, said, "A sub-committee under the regulator is currently looking into the matter. It is likely to submit its report to the chairman by month-end. The report would then be discussed with the government and the RBI."