Bourses may get contract exclusivity

The Forward Markets Commission (FMC) is considering offering "lead time" to those exchanges which come up with new commodity contracts, said director Anupam Mishra.

Mishra said the lead time could vary from three months to one year on a case-to-case basis. For the lead time to be applicable to an exchange, first the novelty of a contract has to be proved by the concerned exchange. Once the regulator is satisfied, the lead time would be offered.

A final decision, however, is yet to be taken on this issue, Mishra said. A commodity exchange does the ground work and relevant research for launching a commodity contract.

But since this exchange does not have any intellectual property rights over the contract, other bourses can use it with cosmetic changes. Lead time is the period in which the same contract can not be launched by competing exchanges.

Recently, a national commodity exchange was seeking IPR protection for highly liquid commodities on its platform with the fear of copying by competitors.

"Changes in contract specification can not be quantified in absolute term as sometimes cosmetic changes also means much and vice versa," Mishra added.

It is worth mentioning that once a contract is launched, the document becomes public and can be accessed by anyone.

Mishra said the FMC does not want regional exchanges to go out of competition and will therefore offer all possible help for their growth.

The FMC is all set to address illiquid commodities related problems this year. Those commodities which have not been traded for one year at a stretch would probably be terminated from trade on respective exchange.

The regulator is awaiting its functional and financial autonomy to be tabled in the coming session of Parliament. Once autonomy is granted, the regulator would have more power to deal with the irregulatories in the commodities trade.