MMTC comex may face delays

Even as the bill amending the Forward Contracts (Regulation) Act is delayed, the Forward Markets Commission (FMC), the commodity market regulator, has suggested changes in guidelines for setting up exchanges. The move is likely to delay the MMTC-Indiabulls consortium's proposed commodity exchange.

The existing guidelines are rudimentary in nature and do not address important issues like launching commodities on the platform within the stipulated timeframe or them remaining illiquid once the permission is granted to the exchange.

The suggestions revolve around trading practices, investments, clearing and deliveries.

Though the exact nature of changes is not known, as the suggestions have already been forwarded to the agriculture ministry, Kewal Ram, FMC member, said that it would make the norms clearer. "The changes, if accepted, will also help clear proposal fast," he added.

The move is significant as the recent proposal put forth by a special purpose vehicle (SPV) set up by MMTC and Indiabulls is awaiting nod from the regulator.

The SPV, which proposes to launch a multi commodity exchange with primary focus on agriculture, sent the revised proposal to FMC on Wednesday. FMC had desired the detailed presentation of the SPV's plan with room for farmers' benefit.

FMC is pressing for the acceptance of the changes in guidelines so that investors who meet the criteria get clearances as early as possible.

Today, because of the complexity in guidelines, a proposal takes at least three to four months to get in-principle clearance.

"However, it is not going to be a barrier for the MMTC-Indiabulls proposal which is backed by the commerce ministry," another FMC official said.

The FC(R)Act Amendment Bill was accepted by the Parliament for discussion two years ago but has not been taken forward since.

Though FMC is yet to see the revised proposal, experts believe that the fourth national commodity exchange would come up only after eight to ten months from now.