Abstract
This paper examines the role of Forward Markets Commission (FMC) in Indian Commodity Markets. The Results show important developments of Forward Markets Commission. Commodity futures and derivatives have a crucial role to play in the price risk management process, especially in agriculture sector. The significance of commodity derivatives has increased in the current scenario. India has long history of trade in commodity derivatives. Organized commodity derivatives in India started as early as 1875, barely about a decade after they started in Chicago. Since 2003, when commodity futures’ trading was permitted, commodity futures market in India has experienced an unprecedented boom in terms of the number of modern exchanges, number of commodities allowed for derivatives trading as well as the value of futures trading in commodities. There are 6 national and 16 regional commodity exchanges recognized and regulated by the FMC. Different types of commodities such as agricultural; bullion, plantation, energy etc. is traded on commodity exchanges in the country. So considering these points an attempt has been made to know the regulatory framework of commodity futures and derivatives market in India and various developments in Indian commodity market and commodity exchanges. This study is an attempt to investigate the performance of Forward Markets Commission in India and its role in Indian commodity market.
Highlights
Commodity trading in India has a long and rich history
Just as SEBI regulates the stock exchanges, commodity exchanges are regulated by Forward Markets Commission (FMC); Forwards Market Commission works under the purview of the Ministry of Finance, Department of Economic Affairs
Forward Markets Commission is a regulatory body for commodity futures/forward trade in India
Summary
“Mandi”, “Gali”, and “Phatak” have been commonly heard in Indian markets for centuries which seems to be coined in 320 BC and referred in Forward Contracts (Regulation) Act, 1952 ;The first organized futures market in India was established in 1875 under the aegis of the “Bombay Cotton Trade Association” to trade in cotton contracts. This was followed by establishment of futures markets in edible oilseeds complex, raw jute and jute goods and bullion. Forward Markets Commission is a regulatory body for commodity futures/forward trade in India. This was set up under the Forward Contracts (Regulation) Act of 1952. There are three tiers of regulations of forward/futures trading system exists in India, namely, Government of India, Forward Markets Commission (FMC) and Commodity Exchanges
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