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Bill on forward contracts may be passed in Budget session
The Hindu
Business Line, January 25, 2011
Commodity-markets
regulator Forward Markets Commission expects the Parliamentary
Standing Committee's report on Forward Contracts Regulation
Amendment (FCRA) Bill 2010 to be submitted on time for it to be
taken up in the Budget session.
The Cabinet had
cleared the Bill last September and it has been referred to the
Parliamentary Standing Committee.
Speaking to the
media, on the sidelines of the Future of Financial Markets 2011
Leadership Summit, Mr B.C. Khatua, Chairman, Forward Markets
Commission, said “the Committee had a meeting with the
Commission on Friday and we are confident that it will submit
its report before the prescribed three months deadline so that
it can be tabled during the second half of the Budget session”.
Expressing
confidence that FMC will be fourth time lucky, Mr Khatua said
the Bill has undergone various changes since it was first
introduced in 1998 with three standing committees submitting
their reports.
The Government seems
more convinced now that the futures trading in commodities were
not stoking up inflation. However, Mr Khatua said, the
Government had considered banning at least six commodities, but
the intervention by FMC saved the day.
Hinting that
competition in the commodity exchange space will intensify, Mr
Khatua said there are five national exchanges currently in
operation while one (Universal Commodity Exchange) is in the
pipeline and another two (NBOT and Pramod Mittal-promoted Ispat
Group have filed an application for launching an exchange) are
in the process of filing their papers.
NO MARGIN HIKE
The Government has
recently restricted the number of commodity exchanges to eight.
FMC has ruled out
further margin hike in guargum futures contract to arrest hike
in prices.
“Despite hiking
margin to 28 per cent prices are still rising. So the demand is
genuine and we do not see much speculation,” he said.
Prices of guargum
has increased 25 per cent since October due to good demand from
oil exploration companies which uses guargum as a lubricant.
“India caters to 80
per cent of the global demand. Instead of crying hoarse over the
price rise, the country should take advantage of high prices in
the global markets.”
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