Banks to play big role in commodity exchanges
Commodity Online MUMBAI: The commodities market regulator — Forward Markets Commission (FMC) — has decided to bat for banks’ participation in commodity exchanges.
The FMC feels that as some banks have already started providing finance to commodities that are hedged on commodity exchanges, the banks role should be increased in Futures trade.
Federal Bank has financed up to 85 per cent of the price of some of the plantation commodities hedged on exchanges. The bank is planning to finance up to 90 per cent.
If banks can take this view — of giving finance with liberal margins for hedging commodities — it is a logical follow up for them to hedge the commodities themselves on commodity exchanges, said FMC chairman B C Khatua at a meeting held recently.
FMC is promoting the idea of aggregators for helping small farmers to hedge their crops on commodity exchanges. The commission held the meeting with potential aggregators such as state- and national-level marketing federations and market intervention agencies in this regard.
Aggregators act on behalf of farmers who are not comfortable in hedging their crops on exchanges either for want of knowledge or because the quantities are small. FMC was also planning to register such aggregators and adopt a liberal regulatory frame work.
Hafed, Nafed and other such institutions have shown interest in becoming aggregators. In Kerala, some cooperative societies are playing the role of aggregators.
MCX Mentha Oil 31 March 2012
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