Last Updated : 04 October 2012 at 21:30 IST
India Reforms: FMC to get autonomy, Commodity options to be introduced
Source :Commodity Online
The much awaited approval for granting autonomy status to commodity market regulator, Forward Markets Commission (FMC) has now become a reality and this will pave the way for rapid growth of commodity futures and introduction of options in commodities
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NEW DELHI (Commodity Online): After allowing foreign direct investment in multi-brand retailing, rapid move towards deregulation of Oil sector, India Government has gone ahead with the much awaited approval to amend Forward Contracts (Regulation) Amendment Bill, 2010 which will pave way for introduction of commodity options and autonomy for market regulator, Forward Markets Commission (FMC).
The Union Cabinet on Thursday approved the proposal to move official amendments to the Forwards Contracts (Regulation) Amendment Bill, 2010 (the Bill, 2010), based upon the recommendations of the Parliamentary Standing Committee of the Ministry of Consumer Affairs, Food & Public Distribution in its 15th Report, in the next session of Parliament.
After the Bill is passed and enacted by Parliament, Forward Market Commission (FMC) as a regulator will get autonomy and power to regulate the market effectively. New products like 'options' will be allowed in the commodity market. This will benefit various stakeholders including farmers to take benefit of 'price discovery and 'price risk management'. The Bill would enhance public accountability of the Regulator by providing for an Appellate Authority.
The recommendations of the Committee with regard to definition of the "Commodity Derivative" in Clause 3, establishment and constitution of Forward Markets Commission in Clause 4, term of office of the Chairman and every other whole time members in Clause 5, accounts and audit in Clause 9, penalties for contravention of certain provisions of Chapter IV in Clause 25 of the Bill, 2010 have been accepted and are proposed to be incorporated as official amendments. The amendment in Clause 25 will require consequential amendment in Clause 26, which is also proposed to be included in the official amendments.
Background:
The Forward Contracts (Regulation) Act provides for the regulation of commodity futures markets in India and the establishment of the Forward Markets Commission (FMC). While the markets have been liberalized with effect from April, 2003 and modern institutional structures are in the process of being evolved, yet the market regulator, FMC is largely functioning in its traditional format.
