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Indian gov't mulls changes in commodities futures bill

Publication Date : 19-07-2012

 

The Indian Union Cabinet today will consider changes in a bill to give more powers to commodity markets regulator Forward Markets Commission (FMC) and introduction of new products like options.

Last week, the Cabinet had deferred the Forward Contract Regulation Act (Amendment) Bill after opposition from key United Progressive Alliance constituent Trinamul Congress.

“The bill is on the agenda of the Cabinet meeting (today),” a source said.

Despite reservations expressed by the Trinamul Congress, the source said that the Food Ministry has not made any changes in the bill.

The bill was introduced in the Lok Sabha in December 2010 and referred to the Parliamentary Standing Committee, which submitted its report on December 22 last year.

The Food and Consumer Affairs (FCRA) Ministry has accepted most of the recommendations of the Parliamentary panel. Sources said the panel has suggested increasing the penalty structure to discourage any violation of provisions of FCRA.

The bill is essential for the development of a commodities futures market as it aims to strengthen the FMC by providing financial autonomy, facilitate the entry of institutional investors and introduce new products for trading such as options and indices.

The Parliamentary panel had recommended greater autonomy for the FMC, which regulates both spot and futures commodity exchanges.

The panel had also suggested allowing financial institutions and banks, mutual funds, and insurance companies to participate in forward market so as to ensure better price discovery and lower volatility. Currently, there are five national and 16 regional commodity bourses in the country.

The Cabinet is also likely to consider tomorrow several key economic proposals, including Steel Authority of India disinvestment, levy of import duty on power equipment and revision of the central support price for sugarcane.

With reports from PTI

 

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