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September 20, 2007 14:03 IST
Declining volumes in futures trading in India's leading commodity bourses has prompted the apex regulator Forward Markets Commission (FMC) to chalk out some urgent steps.
Officials in the FMC said the regulator is planning to permit active role for the state marketing federations in commodity futures trading.
In the last few months, commodity futures volumes in the three national exchanges- MCX, NCDEX and NMCE - have by 18.35 per cent. In contract, the volumes had gone up by around 70 per cent in the last financial year.
The stead decline in the commodity exchanges' turnover has set the alarm bells, forcing FMC to plan immediate measures to infuse liquidity by attract hedgers to the market. The apex regulator is also mulling standardisation of contracts and fungibility of stocks in the exchanges' warehouses.
FMC officials said that if the state agencies like Nafed start market-making, liquidity in the commodity futures will improve as they can hedge the risks in the physical market by buying and selling in the futures market.
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