The Forward Markets Commission (FMC), the regulatory body for commodity futures trading in the country, is expected to grant clearance to five of the 22 parties which have made presentations on forward trading in the 8 varieties of edible oils opened up for futures trading.
Presentations made by leading exchanges and trade bodies/associations to the FMC seeking clearances ended yesterday. While senior FMC officials were tightlipped regarding the decisions, sources said that the regulator would not grant permission in futures trading in all 24 varieties (this includes the oil product derivatives) to any one exchange.
The nod would thus go to those varieties which would ensure higher traded volumes for a bourse, greater liquidity and better income for the trader-dealers, besides also taking into account the regional strength of the exchange.
Sources said that the regulator is expected to give the go-ahead for forward trading in groundnut, rapeseed and soyabean. According to industry sources, these three varieties account for approximately Rs 10,000-12,000 crore out of the total domestic turnover of Rs 48,000 crore in the oilseed sector.
The exchanges which are emerging as front-runners are the Bombay Oilseeds and Oils Exchange/Solvent Extractors' Association, the Soyabean Processors' Association, the Ahmedabad Seed Merchants Association, a trade association from Calcutta and another association from Indore. Presentations were made by other exchanges in Hapur, Indore and some of the other south-based associations.
The FMC chairman K S Misra when contacted said, "It would be too early to comment on developments at this stage. We will however process the applications at the earliest to set the process going.'' A final decision from the regulator is expected to be announced in a week's time.
Market circles have expressed surprise at the fact that a variety like cottonseed may find its sidelined at this stage compared to its other ``high-profile'' oil varieties. Sources said that cottonseed commands a strong exportable surplus following castor.
The government, through the ministry of Food and Consumer Affairs, had permitted forward trading in rice bran, rapeseed/mustardseed, groundnut, sunflowerseed, safflower, cottonseed, copra/coconut, sesame, their oils and cake products besides soyabean, soyaoil and soya meal. The government in its April 12 notification had said that futures trading in these commodities be conducted in a well-organised, professionally managed exchanges which have a national and at least a regional reach.
