The large untapped potential and opportunity in the commodity futures market are sufficient to keep existing and to-be-launched exchanges in business, but there is certainly no scope for more national-level exchanges, says Chairman B C Khatua of the Forward Markets Commission (FMC).
“I don’t see any scope for more new exchanges,” Khatua said in an interview. Four national exchanges are currently operative. ACE Derivatives and Commodity Exchange will be the fifth after its launch in a month. “Besides, Universal Commodity Exchange (UCX) received FMC nod last week, and Indore-based National Board of Trade is in the process of upgrading to a national-level exchange. I think that is more than enough,” he said.
NBOT may not find the going as difficult as greenfield exchange UCX, as it already has good volume of trade in its regional platform, Khatua said.
“However, since UCX case was pending for over a year and a half, the Commission has approved it upon fulfilment of all the criteria,” Khatua said.
The final approval is awaited from the Consumer Affairs Ministry, he said.
Existing bourses and newcomers will continue to be in business even if the amendments to Forward Contracts (Regulation) Act, 1952, are not passed in the near future, as there is a lot of untapped potential, he said. The bill to amend FCRA will enable exchanges to launch options, indices, and swaps, and also allow banks and financial institutions to participate in commodity futures.
India produces a large variety of pulses, spices, oilseeds, and coarse grains. “In fact, the country is the world’s largest producer of spices and pulses, and the exchanges can tap potential in these areas,” he said.
