FMC expects okay for Forward Contracts amendment bill in monsoon session of parliament
31 Mar 2011
The Forward Markets Commission (FMC) expects the long-pending Forward Contracts (Regulation) Amendment bill 2010 to be passed in the monsoon session of parliament, which could result in the restoration of futures trading in urad and tur.
B C Khatua, chairman, FMC, told a meeting of the Commodity Participants Association in India in Delhi that all the necessary consultation process related to the controversial legislation – opposed for years by many political parties – were over. He was hopeful that the monsoon session of parliament would pass the bill, leading to reintroduction of futures trading in urad and tur.
Many political parties in India blame futures trading in commodities for the high rate of food price inflation. Khatua, however, said that the price of the two pulses shot up only after the government banned futures trading in them in 2007. He pooh-poohed fears that futures trading triggers of food price inflation.
Lamon Rutten, managing director and chief executive officer, Multi-Commodity Exchange of India (MCX), also echoes Khatua's sentiments.
According to him, futures trading can help curb inflation, especially of agriculture commodities. He believes that once parliament clears the bill, the regulator (the FMC) would get autonomy.
There would also be a lot of opportunities for growth for the MCX, set up about eight years ago by Financial Technologies, a private company. MCX achieved a turnover of Rs.87 lakh crore (Rs.87 trillion, or nearly $2 trillion) in 2010.
The exchange claims an 80 per cent market share of the Indian commodity futures market. It has emerged as the sixth-largest, and among the fastest-growing, commodity futures exchange in the world, in terms of the number of contracts traded in 2009.
