The Hindu Business Line : Late evening futures trading in select agri commodities likely

THE Forward Markets Commission (FMC) may permit late evening trades in commodity exchanges in respect of certain internationally traded agriculture commodities such as soya and sugar.

"Discussions are on within FMC on this issue," Mr S. Sundareshan, Chairman, FMC, told newspersons here.

He pointed out that late evening trades (beyond 5 p.m.) are currently permitted in commodity exchanges only in respect of certain internationally traded non-agriculture commodities.

The Government had, with effect from April 1, 2003, permitted futures trading in all commodities. As of now, the commodity basket includes all foodgrains, major oilseeds, base metals and bullion (gold and silver). At present, there are in all 95 commodities that have been notified for futures trading.

Earlier, addressing an Assocham conference on `Commodity futures trading in India', Mr Sundareshan also said that FMC has decided to adopt a system where specifications of a contract cannot be changed after the product /contract has been launched. Plans are afoot to insist upon a situation where there is "complete transparency" in the system of arriving at the spot prices on the date of expiry of the contract.

The commodity futures market, which adopts a mark-to-market system, is regulated by the FMC. During 2004-05, the total value of commodity futures trade stood at Rs 5.71 lakh crore.

"To have complete trust in the system, its absolutely essential that investors and stakeholders have faith in the spot prices. We will work closely with the exchanges to ensure that this takes place," Mr Sundareshan said.

He also said that FMC would emphasise on having compulsory delivery on outstanding positions in respect of all future contracts or innovative products (like fortnightly contracts) that would be introduced by commodity exchanges.

The FMC Chairman said that most of the regional stock exchanges already have compulsory delivery on outstanding positions. He said that the insistence of such a norm would not impact the volumes in the exchanges.

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