Regional commoditiy exchanges here to stay: Sundareshan

Allaying the fears that the regional commodity exchanges will not withstand the onslaught of techno-savvy national commodity exchanges...

Allaying the fears that the regional commodity exchanges will not withstand the onslaught of techno-savvy national commodity exchanges, commodity markets regulator Forward Markets Commission (FMC) chairman S. Sundareshan on Sunday said that regional commodity exchanges would continue to survive whether they adopt demutualisation or go for on-line trading.

Sundareshan, who inaugurated the Golden Jubilee celebrations of the Ahmedabad Commodity Exchange (ACE), said, ‘‘The Ahmedabad Commodity Exchange has been keeping alive the futures trading. And the Government of Gujarat is the only State in the country supportive of commodity futures marketing (CFM) which belies the allegations that CFM will affect the trade on bourses.’’

He added that due to CFM the acreage of wheat has gone up by 25 per cent in this fiscal and thus helped the farmers get better earning. The trade volume in CFM is expected to touch $750-800 mn in FY-07. Single commodity exchanges like Surendranagar and Rajkot can now trade in multi-commodities, Sundareshan said.

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The FMC will solve all issues facing the commodity markets and is considering the ownership pattern and FDI to get good return for the stakeholders.

In order to regulate the commodities market more effectively ahead of the wheat procurement season in April, the Centre will pass the Forward Contracts Regulation (Amendment) Bill after the winter session of Parliament. The Bill, introduced on March 21 this year, is currently with the Food and Consumer Affairs Standing Committee headed by DP Yadav, who attributed the delay in tabling the report to drastic changes in the draft legislation. The report understood to have called for a ban on futures trade in wheat is likely to be tabled in Parliament on December 19.

While forward trading was an integral component of the commodities market, the absence of a strong regulator with statutory backing, like in the capital market, has subjected the sector to artificial volatility, he added. The FMC chairman also indicated that that there was no need to restricting guar trading on multi-commodities exchanges as it would affect the volume of trade in the commodity.