Cabinet approves amendments to forward contracts, competition rules

The union cabinet today approved amendments to the Forward Contracts (Regulation) Amendment Bill, 2010 and amendment of the Competition Act, 2002.

The proposed changes to the Forwards Contracts (Regulation) Amendment Bill, 2010, based on the recommendations of the parliamentary standing committee of the ministry of consumer affairs, food & public distribution, will be moved in the next session of Parliament.

The bill once enacted by Parliament, will give Forward Market Commission (FMC) autonomy as a regulator and the power to regulate the market effectively.

New products like 'options' will be allowed in the commodity market. This will benefit various stakeholders, including farmers to take benefit of 'price discovery and 'price risk management'. The bill also aims to enhance public accountability of the regulator by providing for an appellate authority.

The cabinet has accepted the recommendations of the committee with regard to definition of `Commodity Derivative', establishment and constitution of Forward Markets Commission, term of office of the chairman and every other whole time members, accounts and audit and penalties for contravention of certain provisions and these are proposed to be incorporated as official amendments.

The amendments, however, will require consequential amendments, which is also proposed to be included in the official amendments.