MUMBAI: Amid speculation in certain quarters that futures trading could be banned in agri products to contain spiraling food price inflation,the finance ministry has made its intent clear in the Economic Survey that an outright ban should ‘ideally’ not be imposed on futures trade.
“While allowing futures trade does take us towards a more complete market system, it is not true that allowing each additional market always leads to greater efficiency. However, the converse of these claims is not true either. What is being argued here is that, under these circumstances, the government should, ideally, desist from imposing an outright ban on futures trade and, instead, provide it with a regulatory structure to promote transparency and to discourage collusion.”
This has raised hopes among market players of the passage of a bill to strengthen commodity futures market regulator FMC, putting it on par with SEBI. An amendment to FCRA Act, 1952, will give the FMC autonomy and enable it to employ staff to regulate the markets efficiently.
“The suggestion is welcome and could be seen as a likely precursor to the passage of the FCRA Act, 1952 Amendment Bill,” said Suresh Nair, director of Admisi Commodities.
FMC chairman BC Khatua has long maintained that rather than futures trading, increasing demand and shortage of supply has led to food price rise. He pointed out that prices of items that were banned from futures trade over the past three years have increased more than those items that were listed on commodity courses. Items that are suspended include rice, tur, urad and sugar.
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