Commodities Futures Trading: FMC to approach POs, banks

The Forward Markets Commission (FMC) is planning to approach post offices, banks and mandis in the rural areas to display spot and future prices of various commodities on real time basis for the benefit of farmers across the country.

"The proposal is still in the planning stage. We are also looking into the aspect of whether the state and central governments will bear the burden," FMC director, D S Kolamkar, told Business Standard.

Kolamkar said that such an exercise has already been undertaken at the Tehsil and mandi level in Gujarat, which would be completed by the end of next month. The Gujarat initiative was being funded by the three major commodities exchanges existing in the country.

However, with each ticker board costing about Rs 30,000, FMC was looking into the aspect of whether the state and central governments would bear at least part of the burden for spreading the initiative to all states in the country, he said.

At present, in the absence of proper dissemination of information, the participation of farmers in commodities futures trading is negligible. Only in Kerala, where a massive awareness campaign was implemented, there is a significant participation of farmers, particularly those engaged in black pepper and rubber plantations.

Nevertheless, Kolamkar said, the commodities futures market was growing at a rapid pace and its turnover was expected to be at least Rs 10 lakh crore in the current fiscal as against Rs 5.7 lakh crore last year. The basket of commodities being traded in the futures market was also increasing continuously.

Two years back, prior to the establishment of commodities exchanges, the volume of commodities trade in the organised market in the country stood at Rs 66,500 crore.

The major commodities exchanges existing in the country, at present, are Multi Commodity Exchange of India (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi Commodity Exchange (NMCE).

As many as 56 commodities, including crude oil, red chillies, turmeric, rice, wheat, cotton, soya oil, jute, rubber and pepper are currently being traded on these exchanges. Over 1,300 brokers have been registered with these exchanges so far.

MCX chief executive officer, Anjani Sinha, said that the commodities exchanges were looking forward for greater participation by corporate houses.

"Participation of corporates will lend credibility and sustain the market in the long-term. However, big corporate houses are still not using the commodities exchanges," he said.

Keeping this in view, Sinha said, MCX was making presentations to corporate houses and seeking their participation. In this connection, MCX and FMC held a 'Joint Awareness Programme on Commodities' here on Friday.

FMC forms panel to convince RBI, Sebi

Forward Markets Commission(FMC) has constituted a committee to convince RBI and Sebi to allow banks and mutual funds in their jurisdiction to participate in commodities exchanges markets. In an effort to broadbase the futures trading in commodities, the commission is planning to rope in banks and mutual funds into the markets.

Disclosing this here today, FMC director D S Kolamkar said that RBI working group has responded positively to their request. So far, the banks and mutual funds have limited their activities to stock markets and other related operations.

"Since these entities are already exposed to market, we thought it fit for them to enter the commodities markets as well,"Kolamkar said while speaking at the joint awareness programme on Commodities.