Govt rules out banks, MFs in comexes

Amid concerns that trading in commodity exchanges increases prices of essential items, the government has ruled out the possibility of allowing banks and mutual funds to trade in commodity futures in the near future.

"This is not the time to allow banks and mutual funds to trade in commodity futures, given the opposition the exchanges face over rising prices of agricultural commodities," a senior official of the ministry of consumer affairs said.

Institutional investment through mutual funds or banks would create more trouble for the exchanges, he added.

"Though it is not correct to say that futures trading is the main reason for the rise in prices of food items, there is opposition in some quarters," he added.

The increase in prices of essential items had raised concerns within the government, so much so that futures trading in wheat, rice and a few pulses was banned early this year.

The government had also set up a committee under Planning Commission Member Abhijit Sen to study the impact of futures trading on prices of farm goods.

The official said the government was of the view that exchanges should manage their current trade more efficiently before demanding participation of mutual funds and banks.

"Let them (commodity exchanges) first manage the current trade before asking for more," he said.