Talking to reporters in Mumbai, Khatua said that there is an urgent need for producer participation in the futures market, especially in agricultural products.

He said given the fractional land holding, participation by NGOs, private limited companies or co-operative societies behalf of the farmers will be the key to the proper functioning of futures market.

"More participants, especially from the agriculture sector, should use futures market. Small farmers can form groups, informal associations, co-operatives and NGOs, and participate in the market," the FMC chairman said.

Khatua said he wants the FMC to play the dual role of the commission as a promoter and regulator of the commodities futures market.

"In a nascent market like India, the commission has to balance the act of promoting the markets by creating awareness and also regulating to control them," he pointed out.

The FMC chairman emphasized the need for deeper markets with participation from all stakeholders in the value chain, especially hedgers.

"Absence of hedgers in the markets is the reason why the commodity futures markets have been misapprehended," he said.

But he said while markets cannot function without speculators, there was no mathematical measure to define their presence either.

"Fundamentals of supply and demand do not impact the futures market as much as a lack of balance between the hedgers and speculators," he added.