FMC for opening up commodity exchanges

MUMBAI: Commodity markets regulator Forward Markets Commission (FMC) on Tuesday favoured allowing mutual funds and banks in forward trading in commodity exchanges.

"There is a growth in the commodity futures market. The entry of mutual funds and banks should be allowed," FMC Chairman B C Khatua said on the sidelines of the launch of a quarterly journal 'Commodity Vision' here on Tuesday.

Banks and mutual funds are at present not allowed to operate in commodity bourses, and even the ministry of consumer affairs has ruled out allowing such a possibility in the near future.

Khatua also said the policy on foreign direct investment in commodity markets should be ready within 2-3 months.

"As compared to the worldwide trend, we have long but thin history in short-time frame of commodity futures market in India. Perhaps going too fast is not desirable," he said.

The priority of the regulator would be to ensure that the amendments to Forward Contracts Regulation Act, 1952, are passed swiftly in the next session of Parliament, he said.

The emphasis would be on better regulation of intermediaries besides financial and administrative autonomy for the regulator, he said.

Asked whether futures market was responsible for price rise in commodities and inflation, he said the demand-supply gap had caused the rise in commodity prices and the futures markets was only an indicator of the situation.