Three of the six departments of the Forward Markets Commission (FMC) are almost vacant due to lack of experienced staff.
B C Khatua, chairman of the commodity markets’ regulator, is himself on his final run, having got a year’s extension of tenure in August. However, he’s optimistic, pointing to progress on the thing the FMC has been pushing for a very long while, a Bill to empower it to manage its own affairs. The legislation, to amend the Forward Contracts Regulation Act of 1952, was tabled in Parliament yesterday.
“The FMC is working with one third of the proposed staff strength. In the director category, we have 22-23 people but, an equal number (more) are required for prompt and efficient execution of the regulatory system,” said Khatua.
The FMC has six departments. These are markets-I (for opening new exchanges), markets-II (for new contracts), intermediary (for information technology matters and research), monitoring & surveillance (risk management, settlement, audit, etc), legal division (handling legal cases), and vigilance & enforcement (market vigilance, investigation and enforcement). The first three are able to manage, but the latter three are badly affected by lack of staff. One needs, for these, domain knowledge of commodities, notes FMC.
The results has been pendency on important issues, such as that of market access through authorised persons and that on sub-brokers. These should have been decided months earlier, but have yet to be, admit sources in the Commission.
There are allegations on price manipulation in natural rubber on the National Multi Commodity Exchange, on alleged price rigging by a handful of Rajasthan-based operators in guarseed on the National Commodity & Derivatives Exchange and introduction of new contracts on the Indian Commodity Exchange. All need expert perusal and decisions.
Until, the Bill empowering FMC is passed by Parliament, the regulator will have to face these challenges, said Khatua.
Market sources say even after the Bill is through, there will be hurdles such as salary in hiring staff with domain knowledge. Officials of the executive and additional director level in the equity markets regulator, the Securities and Exchange Board of India and the recently constittuted Warehousing Development & Regulation Authority are drawing Rs 2-2.5 lakh per month. Staff of the same cadre draws less than Rs 1 lakh in the FMC.
“Even the FMC chairman does not have the salary an executive director draws in other regulators. Why should anyone join FMC?” queried an ex-Director.
