Govt can restrict commodity trade

The decision over introducing new commodities or continuing with the existing ones for futures trade on exchanges lies with the government and there is no need for a specific legal provision in this regard, said S Sundareshan, chairman, Forward Markets Commission (FMC).

The FMC chief clarified that even after the passage of the amended FCRA Bill, the power to restrict futures trading in certain commodities will remain with the government.

He added that there is no need to have a specific provision in the Bill for the purpose.

The Parliamentary Committee had recently voiced its concerns over futures trade and called for keeping certain sensitive commodities away from the futures markets.

In his welcome address at the sixth National Conference on Commodities Exchanges here in on Wednesday, Sundareshan gave credit to single-commodity exchanges for keeping the tradition of futures trading alive in the country.

Some of these single or regional commodity exchanges are attracting good business and performing the role of price discovery and risk management in an efficient way, he added.

The FMC has already issued guidelines for the development of regional commodity exchanges and is willing to provide any other assistance, as and when needed. He, however, denied any provision of financial assistance that a couple of exchanges have been asking for.

Reiterating his efforts to make the market zero-tolerant to misdemeanours or manipulations, the commodities market regulator stressed the need for proper regulations to ensure financial integrity and consumer protection.

On the issue of FIIs, banks and MFs, the regulator is awaiting the amendment of the Bill, through which these institutions would be permitted in commodities futures in a phased manner beginning with bullion, metals and crude oil. He added that the final decision rests with the government, despite the committee's recommendations opposing their inclusion.

Speaking on the need for urgent development of human resources, the chairman said the shortfall in human resources was being felt at various levels, including broking firms, exchanges and the regulator. He warned that the problem was likely to accentuate in the future, with the rapid growth of the market.