Bourses ask FMC to ease foreign entry

Commodity exchanges have approached Forward Markets Commission (FMC) to make foreign participation in the bourses easier.

Jignesh Shah, managing director of MCX, said all the commodity exchanges had mooted such a proposal with the FMC and a sub-committee had also been formed for the purpose.

Shah admitted the exchange had not done any formal study on the prospects of foreign participation in commodity trading. However, informal discussions had been held with many of the foreign institutions.

He explained the foreign interest was only natural because Indian was among the top three producers and exporters of agricultural commodities.

MCX's current turnover was around Rs 250 crore per day, which was expected to be around Rs 1,000 crore per day, by the end of the financial year.Shah said, the turnover would jump manifold, at least 10 times, in few years' time.

MCX had also lined up futures trading in many commodities, in the coming months like sugar, coffee and non-ferrous metals. The exchange had also become the first exchange to trade in steel.

The exchange had started trading in ingots and hot rolled (HR) products. "We are doing contracts of around 1,000 tonne per day" said Shah.

Estimates indicated that India would become a hub of global trading of commodities. "Trade interest would attract international players" said Shah.

In the near future, spot and futures market would converge. India's potential in commodity trading, as pointed out by MCX officials, was due to the fact that a large number of intermediaries operated at different levels in the commodities market giving it unprecedented depth.