The Hindu Business Line : Regulator seeks lifting of ban on futures trading in commodities

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Regulator seeks lifting of ban on futures trading in commodities

Forward Markets Commission may write to Ministry this week

Our Bureau

Mumbai, Nov. 12 Commodity futures market regulator Forward Markets Commission (FMC) said on Monday that it would recommend lifting the ban on futures trading in four commodities, including wheat.

The FMC Chairman, Mr B.C. Khatua, said that the commission would write to the Consumer Affairs Ministry this week recommending resumption of futures trading in all four commodities that were banned earlier.

FMC is not likely to wait for the formal outcome of the Abhijit Sen Committee report, Mr Khatua told newspersons here on Monday. The Government had set up the committee in March to study the impact of futures trading on commodity prices. “The issue has been largely dispelled and there are also other clear dependable signals to re-allow trading in banned commodities,” said Mr Khatua.

Though the ban was meant to be temporary, it has been continuing without a definite timeline for its withdrawal.

The Government had imposed a ban on futures trading in urad and tur on January 23. An immediate ban on wheat and rice futures followed on February 28, when the Finance Minister announced it during his Budget speech. The step was taken as part of a series of measures to control rising prices of essential commodities.

The Finance Minister’s announcement was believed to have been the outcome of political pressure demanding a ban on futures trading in farm products, blaming it for a sharp rise in the prices of essential food items.

Not in favour of 4th exchange

FMC is not in favour of allowing another commodity exchange, especially promoted by a broker. ast month, the Mumbai-based Indiabulls Financial Services Ltd had announced it would tie up with state-owned MMTC to establish a commodity futures exchange.

Mr Khatua expressed reservation about allowing a broking firm to promote an exchange. “Apart from our reservations, we are also looking at whether there is need for a fourth national commodity exchange.”