This Article is From Sep 29, 2014

Regulator Grants Permission to MCX to Launch New Contracts in 2015

Regulator Grants Permission to MCX to Launch New Contracts in 2015

New Delhi: With Financial Technologies India Ltd (FTIL) fully exiting MCX, the Forward Markets Commission (FMC) on Monday granted permission to the bourse to launch new futures contracts for next year.

"I am directed... to convey in pursuance of bye-laws of your exchange, the approval of the Commission for continuous contracts launch calendars for the futures contracts expiring in the year 2015 and onwards in 27 contracts," commodity market regulator FMC said in a circular.

The bourse has been permitted to launch fresh contracts in commodities such as gold, silver, aluminium, lead, nickel, zinc, copper, natural gas, brent crude oil, natural gas, crude palm oil, mentha oil and cardamom among others, it said.

The approval was given immediately after Financial Technologies (FTIL) signed a new technology pact with MCX and concluded on this day the sale of 15 per cent stake in the commodity bourse to Kotak Mahindra Bank for Rs 459 crore. Signing of such a pact was a pre-condition to conclude the stake sale.

FMC had held back approval for launch of new contracts to MCX to ensure that the bourse puts pressure on FTIL to comply with the December 2013 order that declared it as 'unfit' to run any bourse in view of the Rs 5,600-crore scam at National Spot Exchange Ltd (NSEL), promoted by FTIL.

In its latest circular, FMC said that the contracts to be launched by MCX in the next year should be subject to regulatory norms. The contract specifications should also be as approved by FMC and the directions issued by the regulator from time to time.

MCX should send a monthly/quarterly report on functioning of the various contracts. The exchange should also ensure that there is no "unhealthy speculative trading" in the market, which may result in cornering or artificial rigging up or down of the prices by a particular member or group or class of members, it said.

"If trading in the above mentioned contracts results in excessive/unhealthy speculation, the Commission will intervene and impose stern measures to deal with the situation and if the situation so warrants, revoke the permission granted to any or all the contracts," the regulator cautioned.

As far as agricultural contracts are concerned, apart from the approved quality standards, the exchange should ensure that the commodity deposited should comply with the regulations laid down by the other authorities like Food Safety Standards Authority of India, AGMARK etc, it said.

MCX is a leading commodity bourse in the country. Its volumes have taken a beating after the scam at NSEL surfaced and imposition of commodity trading tax.

The turnover of the exchange was Rs 2,06,876 crore in the first fortnight of this month, down from Rs 2,71,348crore in the same period last year, as per the FMC data.