The WB team is led by Lamon Rutten, former chairman of the Chicago Board of Trade (CBOT), currently an independent advisor on commodity futures market. Rutten is expected to submit his final recommendations on strengthening the commodity futures markets in India by mid-December. The interim recommendations were submitted earlier this year.

With almost all commodities permitted for futures trading and more to come soon, the government expects commodity exchanges to offer efficient and reliable risk hedging services to a cross section of players in the country. The FMC has been functioning with an acting chairman for more than three months. Its last chairman KC Misra the second in two years' returned in August to his hometown in Andhra Pradesh after just a year at FMC. Sources say, the FMC is unlikely to get formal chairman for the next few months.

While the FMC was pulled up by the WB team for its closed door approach towards the proceedings of the various seminars and workshops held over the past two years under the aegies of the WB programme, the commodity futures trading community and the commodity exchange office bearers were pulled up for their unprofessional approach towards commodity futures and their near-total lack of reputation among users of commodity futures in the country. The FMC, for example, refuses to divulge the interim recommendations made earlier, by the World Bank as also the proceedings of various seminars held in the country.

Commodity exchange sources say, the FMC is expected to "circulate the seminar reports and the WB recommendations among the cross section of players in the commodity futures market for whom the workshops are held before taking any policy and regulatory decisions".

Also, both the government and the FMC need to be more proactive towards the importance and effectiveness of futures trading in the country".It is little wonder therefore, that the commodity futures activity has not been able to attract positive attention from the policy makers or from the user community.

The trading volumes on any of the 18-odd commexes are far from encouraging because majority of the traders and speculators, including a section of office bearers of the commexes unabashedly continue to hedge on the illegal, parallel futures markets in Mumbai (even within the premises of the Bombay Oilseeds and Oils Exchange, Vashi, Navi Mumbai and in proper Mumbai), Bhabhar and Rajkot in Gujarat, Ludhiana, Delhi and couple of places near Andhra Pradesh as well, which have sprung up recently.

The FMC claims that it has been taking steps to curb illegal trading. "The FMC has been asked to have on its board outside directors, to have more practical, and professional understanding in handling the subject more efficiently".

According to Bombay Oilseeds and Oil Exchange (BOOE) director Mr Kushal Thaker, the WB had earlier suggested that an association of existing commexes need to be set up to strengthen the commodity futures in the country. "But the FMC in its own bureaucratic ways, went ahead and recommended to the government, for clearing the setting up of yet another commodity exchange - and a strong rival at that - in the form of the proposed National Commodity Exchange by a consortium of some four entities"."We have already set up the Federation of Indian Commodity Exchanges (FICE), some 10 comexes have already signed as members, we are considering various options to strengthen this body" Thaker said. "But simultaneously, the FMC wants us to spend money to go online, even when it openly supports the formation of NCE. The FMC is playing a double game and this would be detrimental to both the existing comexes and the proposed NCE as well and will not achieve any constructive purpose," he said.

What more, the WB team has even pulled up the office bearers of the commexes and commodity trading community as both have not been able to brighten their collective reputation in the commexes. "The comexes and the office bearers need to improve their coterie-like approach of managing the affairs of the commexes and it is necessary that they adopt a professional and transparent approach in this direction", said an exchange source.

The commodity futures trading community has also been asked by the WB team to broaden their base among the farmers and cooperatives as well, so as to effectively reach the targetted user community. "Merely operating from and for those in the cities will not work".

Little wonder therefore, the formation of the proposed NCE is being opposed tooth and nail by the existing comexes. But will the existing comexes meet the requirements of the risk hedging requirements the way they are functioning?

"I am not too optimistic about the efficiency of the domestic bourses to meet the requirements of offering professional risk hedging platform to the user community", feels BOOE's former president Navinchandra Shah. "For various reasons, including egoistic nature (of) the comexe chiefs they are unable to come on a common platform to collectively oppose the proposed NCE". Mr Shah, during his decade long tenure as BOOE president, had spearheaded the cause for trading in futures of the oilseeds complex and was also the founder member of the proposed FICE. "The government has given all the permission we wanted, now if we are not able to deliver results it would surely be our fault." he said.

FICE musters up courage to file RoC applicaitonThe two-year old informal Federation of Indian Commodity Exchanges (FICE) has finally mustered up courage to approach the Registrar of Companies (RoC) for getting the FICE registered as a section 25 (non-profit) company under the Companies Act. The application was filed last week and is expected to be cleared by November end.

Included in the list of initial signatories to the FICE application are East India Cotton Association (EICA) president Mr Suresh Kotak and Bombay Oilseeds and Oils Exchange (BOOE) president Mr PM Chheda. While the details of the memorandum of association of FICE are not yet available, informed sources say, it has been set up to meet the common goal of "welfare of the Indian commexes" and make collective representation to the government to meet this common goal.

The FICE is understood to have been set up on the lines of the USA's National Federation of Association (NFA) of commodity futures exchanges which is a highly respected self regulatory body for all commodity futures exchanges in the USA including the Chicago Board of Trade (CBoT), New York Commodity Exchange (NYMEX) and others.