Need to build strong ecosystem for more transparency: FMC

MUMBAI: To achieve more transparency in the futures market there is a need to build a strong ecosystem, like proper warehousing and uniform Goods and Service Tax, Forward Markets Commission Chairman Ramesh Abhishek has said.

"Our focus is to improve transparency of the market and to have better alignment with the physical market. To achieve this transparency in the futures market we need to build a strong ecosystem," Abhishek said.

The futures market can act as a catalyst to develop a strong ecosystem like uniform Goods and Service Tax (GSTs), credit linkages (warehouse receipts) among others, he explained.

Transparency will help in boosting confidence and improve participation in the market, he added.

Abhishek further said, to broaden the market there is a need for more liquidity, which can only be achieved with the participation of banks and financial institutions.

However, in the current scenario, the participation of banks and other financial institutions is restricted by regulations, he added.

"When there will be more institutional participation in the futures market, the real impact will be felt in terms of liquidity," Abhishek said.

The exchanges are also working on encouraging participation of more aggregators that will boost hedgers and farmers, who, due to marginal land holding fail to gain from futures market.

"The farmers need more aggregators to participate in the futures market. There are 85 percent small and marginal farmers in the country, who can't participate directly," Abhishek added.