By IANS
New Delhi : The Forward Markets Commission (FMC), which regulates trading of commodities in the country, will be made an autonomous institution with more powers to develop and watch over this booming industry.
A meeting of the union cabinet, presided over by Prime Minister Manmohan Singh, Thursday decided to promulgate an ordinance to amend the Forwards Contracts (Regulation) Act, 1952, to arm the commission with more powers.
“The ordinance proposes to strengthen legal and regulatory framework in respect of the commission regulating commodities marketing and to grant greater autonomy to commission,” Information and Broadcasting Minister Priyaranjan Dasmusi said.
“It will effectively regulate and develop commodity forward marketing in India,” Dasmunsi told reporters, while explaining that the commission was thus far under the administrative control of the Ministry of Consumers Affairs.
He said the commission, which had four members till now, will now have nine, with three of them functioning as full-time members, with a full-time chairperson.
“The three full-time members will not be allowed to take any employment with any private body dealing in commodities marketing,” he said, adding that the penalty for violations was being enhanced from Rs.1,000 to Rs.25,000.
Headquartered in Mumbai, the Forward Markets Commission was set up in 1953 under the Forward Contracts (Regulation) Act, 1952.
But organised commodities market in India dates back to 1875 when the Bombay Cotton Trade Association Ltd was set up, followed by the Bombay Cotton Exchange Ltd in 1893. But most of the exchanges disintegrated in the 1970s.
The present day futures trading owes its genesis to K.N. Kabra committee report of 1993 that recommended the introduction of futures trading in basmati rice, cotton, jute, oil seeds, rice bran oil, castor, linseed, silver and onions.
The committee also suggested that some of the existing commodity exchanges like those for pepper and castor seed be upgraded to the level of an international futures market.
A notification was issued on April 1, 2003, to lift the ban on futures trading in commodities, while continuing to bar options trading. Today, futures’ trading in commodities has overtaken the volumes of stock markets.