The National Stock Exchange, the country's largest equity and debt stock exchange, has also expressed an interest to set up a separate commodity exchange and offer commodity futures trading to its equity and debt trading members.
In the light of the government's interest in
boosting commodites futures trading, the FMC intends to help commodity exchanges improve their monitoring and regulatory mechanisms. The initiative will initially involve exchange dealing in at least six commodities."We are keen to allow these exchanges to take up futures trading," said Vijay K Aggarwal, FMC chairman. ``However, before this, we will like them to improve their monitoring and other related activities.'' Aggarwal refused to give details, saying he will announce them at the forthcoming meeting of the exchanges planned in Mumbai in the first half of January.
It is estimated that, on an average, there is a daily turnover of around Rs 90-100 crore in just six commodities, giving a combined annual turnover of Rs 27,000 crore-30,000 crore. If futures trading is introduced for these commodities, the turnover volume could expand considerably, says Agarwal.
Against the Kabra committee's recommendations of 17 commodities that can be considered for allowing futures trading, FMC thinks initially six
commodities could be tested before expanding the list. These are: pepper, turmeric, hessian, castorseed, potato, and gur/jaggery. Accordingly, the exchanges dealing in these commodities are expected to seriously take up commodities futures trading. These are situated at Sangli (turmeric); Calcutta (for hessian), Bombay, Ahmedabad and Rajkot exchanges (for castorseed), the exchanges at Hapur, Kanpur and Agra for potato futures, and some 10 different exchanges, including Amritsar, Bhatinda, Ludhiana, Gwalior and Muzzaffarnagar, for jaggery/gur.
Last year, a similar exercise was undertaken by the FMC in June 1996. It was in the presence of CK Modi, secretary, civil supplies. This meeting, the first after FMC's current chairman Aggarwal took office early last year, apprised the participants of the government's keenness to kick off commodity futures on the lines of the recommendations made by the Kabra committee.
During the last 18-month period (since June 1996), the FMC had surveyed the conditions prevailing
at these exchanges.``It is high time that the exchanges sit together and chalk out plans to have a common set of bylaws,'' said Agarwal, adding, ``we want them to take up this responsibility before we can give them the freedom to take up futures trading.''
The January meeting will, therefore, deliberate on details for uniform bylaws, introducing capital adequacy norms for the members, giving longer registration periods (against yearly currently) to commodity exchanges to make them self-regulatory organisations. The deliberations will, however, be in the light of FMC's findings during the last 18 months.
Given the government's apathy towards allowing futures trading in commodities till 1995, the majority of the commodity exchanges had adopted restrictive policies. Even their bylaws are different, which in the light of ongoing developments need to be made uniform at the earliest.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
