Tuesday, September 28,
The Union Cabinet recently approved long pending amendments to the Forward Contracts (Regulation) Act, 1952, giving autonomy to the Forwards Markets Commission (FMC).
Mr B.C. Khatua, Chairman of FMC, said “the amendments are very important for the development of the commodity futures market. The amendments will strengthen the regulatory framework of the market and grant autonomy, both financial and administrative to the regulator.”
The amendments provide for introduction of a basket of new derivative products such as options and indices trading. This would attract greater participation in the market by giving participants a wider choice of derivative products to trade in.
Lack of innovative products such as option and indices, absence of institutional participants and inadequate penal provisions has been tsome of the major constraints of the derivatives market. Post amendment, most of these constraints will be removed.
Mr Khatua also said, “We think, the market is ready for the next phase of development which includes introduction of options trading. However, they have to work really hard to design the contracts in consultation with the potential market participants and set the premiums at realistic levels.”
Source: The Business Line
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