The Forward Markets Commission (FMC) is expecting the Central Government to do away with the ban on futures trading on four commodities next month. In May, the government had suspended futures trading in soyoil, potato, rubber and chickpea for four months, to control the soaring inflation. FMC had convened a meeting of representatives of trade and manufacturers associations, chambers of commerce and industry, marketing federations and co-operatives, in Bangalore on August 28.
Showing posts with label FMC. Show all posts
Showing posts with label FMC. Show all posts
Friday, August 29, 2008
Saturday, May 31, 2008
FMC Said In A Notification Prescribing Guidelines
MUMBAI: Commodity futures markets regulator, Forward Markets Commission (FMC), has said it would seek at least 26% equity in paid up capital by a government company in any proposed national-level exchange.
The FMC said in a notification prescribing guidelines for setting up new commodity exchanges that bourses should be registered as a public limited company with an equity capital of Rs 100 crore.
The notification, posted on FMC web site on Thursday evening, stipulates that institutional shareholders should own at least 20%. Any shareholder having more than 26% stake will have to pare it down to 26% within 2 years beginning with the fourth year of the date of recognition.
Individuals cannot hold more than one per cent of the paid up capital, the notification said. In October, 2007, Indiabulls Financial Services sought FMC’s permission to set up a commodities exchange in partnership with state-run commodities trading company MMTC.
The regulator is yet to grant permission. Indiabulls would hold 74% in a special purpose vehicle (SPV) to set up the exchange and MMTC will hold the rest and two firms would invest a total of Rs 100 crore in equity.
FMC said there is a renewed interest in establishing new national level commodity bourses. Media reports had suggested more Indian companies were planning to set up national level commodity exchanges to grab a pie of the fast growing Indian commodity futures market.
The government, which allowed futures trading in commodities in 2003, has one of the fastest growing commodity futures market with a combined trade turnover Rs 40.7 trillion in FY08.
Meanwhile, commodity bourses have shrugged-off the futures suspension shock to register gains in trade turnover, said a senior official with the FMC. The combined trade of commodity bourses rose 10.2% to Rs 5.1 trillion between April 1 and May 15, over the corresponding period last year, despite a trading suspension on four commodities from May 8.
Food and agriculture minister Sharad Pawar said on Thursday that farmers had not gained from the ban imposed on futures trading in wheat, rice, soya oil, rubber, two varieties of lentils, potato, and chickpea.
The FMC said in a notification prescribing guidelines for setting up new commodity exchanges that bourses should be registered as a public limited company with an equity capital of Rs 100 crore.
The notification, posted on FMC web site on Thursday evening, stipulates that institutional shareholders should own at least 20%. Any shareholder having more than 26% stake will have to pare it down to 26% within 2 years beginning with the fourth year of the date of recognition.
Individuals cannot hold more than one per cent of the paid up capital, the notification said. In October, 2007, Indiabulls Financial Services sought FMC’s permission to set up a commodities exchange in partnership with state-run commodities trading company MMTC.
The regulator is yet to grant permission. Indiabulls would hold 74% in a special purpose vehicle (SPV) to set up the exchange and MMTC will hold the rest and two firms would invest a total of Rs 100 crore in equity.
FMC said there is a renewed interest in establishing new national level commodity bourses. Media reports had suggested more Indian companies were planning to set up national level commodity exchanges to grab a pie of the fast growing Indian commodity futures market.
The government, which allowed futures trading in commodities in 2003, has one of the fastest growing commodity futures market with a combined trade turnover Rs 40.7 trillion in FY08.
Meanwhile, commodity bourses have shrugged-off the futures suspension shock to register gains in trade turnover, said a senior official with the FMC. The combined trade of commodity bourses rose 10.2% to Rs 5.1 trillion between April 1 and May 15, over the corresponding period last year, despite a trading suspension on four commodities from May 8.
Food and agriculture minister Sharad Pawar said on Thursday that farmers had not gained from the ban imposed on futures trading in wheat, rice, soya oil, rubber, two varieties of lentils, potato, and chickpea.
Saturday, March 29, 2008
FMC To Fall Prey To Hunger In IndiaFMC To Fall Prey To Hunger In India
Will hunger hit Forward Markets Commission’s (FMC) ambitious plans for the future? If things go like this and the message coming out of the Central government are any indication, the big plans of Futures trade is all set to gather dust for some more time.
The government’s reasons are simple. Inflation is ruling at 6.68 per cent, a 13-month high. Again the UPA government at the Centre is gearing up for the elections. A soft Budget by Union finance minister P Chidambaram was a clear indication for that.
The government does not want to spoil the good impression created with the Budget with a Rs 60,000 crore loan waiver by letting the inflation go high. Moreover, the government is already under pressure from the Left on Indo-Us nuclear deal and rising prices.
And, according to the Left and certain other groups in the UPA government, the main reason for inflation is Futures trade in commodities. Even though the Abhijit panel, appointed to study the impact of Futures trade in inflation, recommended that Futures is not to be blamed for inflation, the government and Left parties are not ready to buy that argument.
So, the Centre started the ‘ban Raj’ last year itself. It banned Futures trade in wheat, tur and several other food items in a bid to rein in the rising prices.
But, it seems, nothing has worked. Prices are still going up. And the government is back to square one, still fighting inflation. This time also the victim will be Futures trade. The government will, in all possibility, think more ways to stop Futures trade in several other commodities so that the prices come down.
Even though the finance minister says that the reason for the price rise is a supply problem, most of the UPA partners are not ready to buy that argument.
Here comes the jolt for the FMC. Worried over the price rise, the Centre is unlikely to let Futures trade thrive in India.
It may also try to clip the wings of the FMC. During the past few months the government there were efforts to give FMC autonomy and more powers like the SEBI.
But, if inflation goes up like this, all those plans may go to the backburner.
In January, the government had issued an ordinance, making FMC independent regulatory body like the Securities and Exchange Board of India (Sebi) or the Telecom Regulatory Authority of India (Trai).
However, the ordinance will lapse on April 7. The hope for the FMC was that by then the Forward Contracts (Regulation) Amendment Bill, 2008 — introduced to replace the Ordinance — will be passed by Parliament.
But, if the situation remains the same, there is a big chance of the Bill facing lot of opposition from the UPA partners itself.
The issue of forward trading in commodities is a politically sensitive one, especially at a time when inflation is at a 13-month high of 6.68 per cent.
Moreover, the government also does not want to be seen as favouring commodities trading, which has often been cited as one of the major reasons for the rising commodity prices.
While the consumer affairs ministry was keen that the Bill be discussed before Parliament went into recess, there seemed to be a lack of political support for the move after the parties cited Futures trading as one of the reasons for the spurt in farm prices in recent weeks.
According to some farmers organizations, the FMC’s autonomy will be opposed by several parties and farmers’ unions if the inflation goes beyond the anticipated levels.
The government’s reasons are simple. Inflation is ruling at 6.68 per cent, a 13-month high. Again the UPA government at the Centre is gearing up for the elections. A soft Budget by Union finance minister P Chidambaram was a clear indication for that.
The government does not want to spoil the good impression created with the Budget with a Rs 60,000 crore loan waiver by letting the inflation go high. Moreover, the government is already under pressure from the Left on Indo-Us nuclear deal and rising prices.
And, according to the Left and certain other groups in the UPA government, the main reason for inflation is Futures trade in commodities. Even though the Abhijit panel, appointed to study the impact of Futures trade in inflation, recommended that Futures is not to be blamed for inflation, the government and Left parties are not ready to buy that argument.
So, the Centre started the ‘ban Raj’ last year itself. It banned Futures trade in wheat, tur and several other food items in a bid to rein in the rising prices.
But, it seems, nothing has worked. Prices are still going up. And the government is back to square one, still fighting inflation. This time also the victim will be Futures trade. The government will, in all possibility, think more ways to stop Futures trade in several other commodities so that the prices come down.
Even though the finance minister says that the reason for the price rise is a supply problem, most of the UPA partners are not ready to buy that argument.
Here comes the jolt for the FMC. Worried over the price rise, the Centre is unlikely to let Futures trade thrive in India.
It may also try to clip the wings of the FMC. During the past few months the government there were efforts to give FMC autonomy and more powers like the SEBI.
But, if inflation goes up like this, all those plans may go to the backburner.
In January, the government had issued an ordinance, making FMC independent regulatory body like the Securities and Exchange Board of India (Sebi) or the Telecom Regulatory Authority of India (Trai).
However, the ordinance will lapse on April 7. The hope for the FMC was that by then the Forward Contracts (Regulation) Amendment Bill, 2008 — introduced to replace the Ordinance — will be passed by Parliament.
But, if the situation remains the same, there is a big chance of the Bill facing lot of opposition from the UPA partners itself.
The issue of forward trading in commodities is a politically sensitive one, especially at a time when inflation is at a 13-month high of 6.68 per cent.
Moreover, the government also does not want to be seen as favouring commodities trading, which has often been cited as one of the major reasons for the rising commodity prices.
While the consumer affairs ministry was keen that the Bill be discussed before Parliament went into recess, there seemed to be a lack of political support for the move after the parties cited Futures trading as one of the reasons for the spurt in farm prices in recent weeks.
According to some farmers organizations, the FMC’s autonomy will be opposed by several parties and farmers’ unions if the inflation goes beyond the anticipated levels.
Friday, January 25, 2008
Cabinet Clears Changes To Forward Contracts Act
New Delhi: The Union Cabinet, on Thursday, approved the promulgation of an ordinance amending the Forward Contracts (Regulation) Act, 1952, paving the way for greater autonomy for the commodities market regulator, Forward Markets Commission (FMC).
The ordinance - which will eventually have to be endorsed by the Parliament through a Bill expected in the coming Budget session - also amends the definition of ‘forward contract’ to include ‘commodity derivatives’. As of now, the definition of what can be traded in commodity futures exchanges covers only ‘goods’ that are physically deliverable.
Implications
Once the definition is extended to ‘derivatives’, it will enable the exchanges to trade in commodity options, index futures, weather derivatives, carbon credits and other such intangibles that are not physically deliverable. Holders of options contracts, unlike futures, have the right but no obligation to deliver or buy the underlying goods on the settlement date. Parties to a futures contract, on the other hand, are necessarily obliged to fulfil the contract on the specified date of delivery.
• Quarterly results of corporates: Check out
“While the ordinance enables trading in commodity-related intangibles, it leaves the decision of allowing particular exchanges to launch options, commodity indices and similar derivative contracts to FMC. The latter’s concurrence is necessary before NCDEX or MCX can trade in these contracts,” a Department of Consumer Affairs official clarified.
Empowering the regulator
As far as empowering the commodities regulator is concerned, the ordinance provides for an increase in the number of its members from the current four to nine, with up to three whole-time members and a chairman. It bars the future employment of FMC members with any person dealing with the commodity market or intermediary under the FCR Act. Moreover, the FMC will have the freedom to recruit its own officers and employees, levy fees and impose penalties on traders and intermediaries, and undertake search and seizure operations.
To ensure greater autonomy and independence to the regulator, the ordinance also permits all fees and other receivables (barring penalties) to be credited to the FMC General Fund. This Fund will be used to manage the affairs of the Commission. Also, the Securities Appellate Tribunal (SAT) will be designated as the ‘appellate tribunal’ for the purposes of the FCR Act. Appeals against the FMC’s orders will go to the SAT and from there to the Supreme Court.
Impending Budget session
The timing of the current ordinance is significant, given that the Budget session is barely a few weeks away.
Also, the Abhijit Sen Committee is yet to submit its report, recommending whether or nor futures trading in wheat and rice is to be resumed after a ban imposed early last year.
The ordinance - which will eventually have to be endorsed by the Parliament through a Bill expected in the coming Budget session - also amends the definition of ‘forward contract’ to include ‘commodity derivatives’. As of now, the definition of what can be traded in commodity futures exchanges covers only ‘goods’ that are physically deliverable.
Implications
Once the definition is extended to ‘derivatives’, it will enable the exchanges to trade in commodity options, index futures, weather derivatives, carbon credits and other such intangibles that are not physically deliverable. Holders of options contracts, unlike futures, have the right but no obligation to deliver or buy the underlying goods on the settlement date. Parties to a futures contract, on the other hand, are necessarily obliged to fulfil the contract on the specified date of delivery.
• Quarterly results of corporates: Check out
“While the ordinance enables trading in commodity-related intangibles, it leaves the decision of allowing particular exchanges to launch options, commodity indices and similar derivative contracts to FMC. The latter’s concurrence is necessary before NCDEX or MCX can trade in these contracts,” a Department of Consumer Affairs official clarified.
Empowering the regulator
As far as empowering the commodities regulator is concerned, the ordinance provides for an increase in the number of its members from the current four to nine, with up to three whole-time members and a chairman. It bars the future employment of FMC members with any person dealing with the commodity market or intermediary under the FCR Act. Moreover, the FMC will have the freedom to recruit its own officers and employees, levy fees and impose penalties on traders and intermediaries, and undertake search and seizure operations.
To ensure greater autonomy and independence to the regulator, the ordinance also permits all fees and other receivables (barring penalties) to be credited to the FMC General Fund. This Fund will be used to manage the affairs of the Commission. Also, the Securities Appellate Tribunal (SAT) will be designated as the ‘appellate tribunal’ for the purposes of the FCR Act. Appeals against the FMC’s orders will go to the SAT and from there to the Supreme Court.
Impending Budget session
The timing of the current ordinance is significant, given that the Budget session is barely a few weeks away.
Also, the Abhijit Sen Committee is yet to submit its report, recommending whether or nor futures trading in wheat and rice is to be resumed after a ban imposed early last year.
FMC Ordinance May Build Investor Confidence
Mumbai: The Union Cabinet’s decision to issue an ordinance to give autonomy to the Forward Markets Commission (FMC) is seen as a move that will help build the confidence of investors - be it investment or mutual funds, financial institutions or small traders.
“It is a positive signal to the commodities market that could now witness broad-based participation of players who matter rather than a handful of speculators,” said an official with a commodities advisory firm.
Indication
The move on ordinance is a silver lining to the commodity markets that would pave way for “progression towards a more mature market. Although we are long way to go, the ordinance would change the face of Indian commodity markets as it gives more power to the regulator FMC,” said Si. Kannan, Associate Vice-President of Kotak Commodity Services Ltd.
Enabling growth
According to Joseph Massey, Deputy Managing Director of MCX, the Centre’s approval of the ordinance before the passage of the Forward Contracts (Regulation) Bill (FCR) will enable the industry to grow on the lines of global exchanges. “The bill provides greater autonomy to FMC for better regulation of the market and it also allows the launch of new products such as options and indices. The participation of banks, FIIs and institutional investors was in some way linked to the approval of this Bill. With the autonomy of FMC, we believe, that these institutions will now be allowed to participate in commodity futures market,” he said.
• Quarterly results of corporates: Check out
Ravinder Sachdev, Head (Legal) of NCDEX said: “FMC will now be able to impose financial penalty on errant members and also regulate intermediaries like warehouses, depository participants and others. The investors who are not satisfied with an FMC order can appeal to the Securities Appellate Tribunal and then the Supreme Court.”
Kannan said that the Government had finally turned pro-active in allowing greater freedom to the commodity market regulator and hence, improving the market by way of ordinance as the final amendment in the Parliament might take some time. “Product innovations are a key to market strength and success and this ordinance, by allowing greater powers to FMC, would pave the way for products like option on futures, index futures and option, and weather derivatives. And more importantly the Indian market will have a commodity index (that may be tradable) for the world to look at, similar to ones in the developed countries,” he said.
FMC powers
The move to arm FMC with more power would give retail investors a platform to play safe, by way of portfolio management that is restricted now. Further, new product innovations like option on mini futures and structured products that are very popular in the capital market might be replicated in the commodity market if FMC wishes to do so, he said.
“Also, FMC can levy penalty, charge fees, take their own decisions like SEBI and can allow new product developments and amendments, enabling the decision making process to be faster in the much-needed commodity market,” Kannan said.
“It is a positive signal to the commodities market that could now witness broad-based participation of players who matter rather than a handful of speculators,” said an official with a commodities advisory firm.
Indication
The move on ordinance is a silver lining to the commodity markets that would pave way for “progression towards a more mature market. Although we are long way to go, the ordinance would change the face of Indian commodity markets as it gives more power to the regulator FMC,” said Si. Kannan, Associate Vice-President of Kotak Commodity Services Ltd.
Enabling growth
According to Joseph Massey, Deputy Managing Director of MCX, the Centre’s approval of the ordinance before the passage of the Forward Contracts (Regulation) Bill (FCR) will enable the industry to grow on the lines of global exchanges. “The bill provides greater autonomy to FMC for better regulation of the market and it also allows the launch of new products such as options and indices. The participation of banks, FIIs and institutional investors was in some way linked to the approval of this Bill. With the autonomy of FMC, we believe, that these institutions will now be allowed to participate in commodity futures market,” he said.
• Quarterly results of corporates: Check out
Ravinder Sachdev, Head (Legal) of NCDEX said: “FMC will now be able to impose financial penalty on errant members and also regulate intermediaries like warehouses, depository participants and others. The investors who are not satisfied with an FMC order can appeal to the Securities Appellate Tribunal and then the Supreme Court.”
Kannan said that the Government had finally turned pro-active in allowing greater freedom to the commodity market regulator and hence, improving the market by way of ordinance as the final amendment in the Parliament might take some time. “Product innovations are a key to market strength and success and this ordinance, by allowing greater powers to FMC, would pave the way for products like option on futures, index futures and option, and weather derivatives. And more importantly the Indian market will have a commodity index (that may be tradable) for the world to look at, similar to ones in the developed countries,” he said.
FMC powers
The move to arm FMC with more power would give retail investors a platform to play safe, by way of portfolio management that is restricted now. Further, new product innovations like option on mini futures and structured products that are very popular in the capital market might be replicated in the commodity market if FMC wishes to do so, he said.
“Also, FMC can levy penalty, charge fees, take their own decisions like SEBI and can allow new product developments and amendments, enabling the decision making process to be faster in the much-needed commodity market,” Kannan said.
Wednesday, January 23, 2008
Commodities Recover On FMC Chief Pep Talk
Mumbai: Futures trading in agriculture commodities on NCDEX followed the stock market downhill, but recovered at the later session. Pep talk by the FMC Chairman, B.C. Khatua, and the Government decision to consider autonomy to FMC also boosted sentiments.
Soyabean, barley and jeera futures hit the lower circuit, while maize was close to the lower circuit.
Soyabean hit the lower circuit of 6 per cent, but recovered marginally to close with a loss of 3 per cent at Rs 1,960 per quintal, while soya oil futures, which was down 2 per cent, trimmed loses to close lower by 0.87 per cent at Rs 581 per 10 kg.
• Quarterly results of corporates: Check out
“It was bearish day for agriculture commodities. Hedge funds in the international markets have withdrawn from commodities to cover up their position in equities,” said an analyst.
Jeera slips
Jeera for February delivery fell 1.59 per cent to Rs 10,615 per quintal on weak demand. Barley for May delivery lost 1.82 per cent to Rs 992 per quintal on profit booking.
Among gainer, chana futures was up 1.27 per cent to Rs 2,319 after the Khatua said that FMC will urge the government to lift the ban on urad, tur and wheat.
After gaining by Rs 250 in the last 3-4 session, turmeric gained 2.96 per cent to Rs 2,820 per quintal on buying interest at lower levels. Fresh buying was also witnessed in maize which rose 1.24 per cent to Rs 785 per quintal. Potato was up 1.39 per cent to Rs 588 per quintal.
On MCX, cardamom lost 1.63 per cent to Rs 694 per kg, while potato gained 2.18 per cent to Rs 515 per quintal.
MCX recorded a turnover of Rs 8,380 crore up to 5 pm, while it was Rs 3,937 crore on NCDEX.
Soyabean, barley and jeera futures hit the lower circuit, while maize was close to the lower circuit.
Soyabean hit the lower circuit of 6 per cent, but recovered marginally to close with a loss of 3 per cent at Rs 1,960 per quintal, while soya oil futures, which was down 2 per cent, trimmed loses to close lower by 0.87 per cent at Rs 581 per 10 kg.
• Quarterly results of corporates: Check out
“It was bearish day for agriculture commodities. Hedge funds in the international markets have withdrawn from commodities to cover up their position in equities,” said an analyst.
Jeera slips
Jeera for February delivery fell 1.59 per cent to Rs 10,615 per quintal on weak demand. Barley for May delivery lost 1.82 per cent to Rs 992 per quintal on profit booking.
Among gainer, chana futures was up 1.27 per cent to Rs 2,319 after the Khatua said that FMC will urge the government to lift the ban on urad, tur and wheat.
After gaining by Rs 250 in the last 3-4 session, turmeric gained 2.96 per cent to Rs 2,820 per quintal on buying interest at lower levels. Fresh buying was also witnessed in maize which rose 1.24 per cent to Rs 785 per quintal. Potato was up 1.39 per cent to Rs 588 per quintal.
On MCX, cardamom lost 1.63 per cent to Rs 694 per kg, while potato gained 2.18 per cent to Rs 515 per quintal.
MCX recorded a turnover of Rs 8,380 crore up to 5 pm, while it was Rs 3,937 crore on NCDEX.
Subscribe to:
Posts (Atom)
