The Hindu Business Line : Pawar rules out FMC-SEBI merger

PUTTING an end to all speculation on having a single regulator for both commodities and securities markets by merging FMC with SEBI, the Government has decided to retain Forward Market Commission (FMC) as the sole regulator for the commodity futures markets in India. This was announced by Mr Sharad Pawar, Union Minister of Agriculture and Consumer Affairs, here on Saturday.

Mr Pawar said the Forward Contracts (Regulation) Act was expected to be amended in the Budget session of Parliament and "this amendment will restructure and strengthen the FMC and make it an autonomous and independent regulator." The FMC would have enhanced regulatory and penal powers, he said.

Growing volumes: The regulation of futures market has become increasingly important in the context of growing volumes in the forward markets. The daily volume has increased from Rs 2,000 crore a year ago to Rs 10,000 crore now.

Currently India has three national multi-commodity exchanges and 21 regional exchanges. The number of commodities traded has also increased to 89 now from 59 a year ago.

Addressing members of the commodity exchanges at a conference convened by the FMC, the Minister said the amendment to the Act would also provide for setting up of a Forward Markets Appellate Tribunal on the lines of SAT set up under the SEBI Act.

Banks into futures: Mr Pawar said the Government had taken up with the RBI the issue of allowing banks to enter the commodities derivative markets. The FMC took a decision recently to allow FIIs and mutual funds to trade in the commodities futures market. However, this requires amendments to the SEBI Act.

Mr Pawar said the Government had initiated legislative measures to make `Warehouse Receipts' a negotiable instrument in India. Under this, accredited warehouses will be allowed to issue receipts against the commodity, which can be traded.

The Government is also focussing on overhauling of other legislations such as the Essential Commodities Act and Prevention of Food Adulteration Act for facilitating better internal trade in commodities.

Mr L. Mansingh, Secretary, Department of Consumers Affairs, said the Government would take measures to ensure that infrastructure facilities were created to help farmers get a fair price for their produce. He said a project to disseminate price information to farmers was being set up in Gujarat.

Farmers would be provided with spot and futures prices through a network linking major markets and villages.

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