Indian commodity market can treble in size to an annual turnover of Rs 100 trillion by 2010, if the government allows investment by FIIs, banks and mutual funds as well as new products like options trading, top market officials believe.
"The commodity markets can reach the Rs 100,00,000 crore (Rs 100 trillion) mark by 2010 on two conditions. First and foremost, government should approve the much awaited FCRA bill. Secondly, it should allow options trading at the earliest to bring breadth in the market," market regulator FMC chairman B C Khatua told PTI from Mumbai.
The amendment of Forward Contracts Regulation Act is awaiting government's nod since 2005 and includes issues like allowing foreign institutional investors, mutual funds and banks to invest in commodities, entrusting the regulator with more powers and removal of ban on options trading and designating Securities Appellate Tribunal as the FCRA appellate tribunal.
The annual market turnover had nearly doubled to about Rs 35 trillion in 2006, but posted only a marginal gain in 2007.
The market turnover was affected last year due to some regulatory measures like ban on four commodities, limiting open interest and compulsory delivery, Khatua said.
Stressing on the need for more market breadth, leading commodity exchange MCX's deputy managing director Joseph Massey said, "The permission to launch index-based instruments following the amendment to FCRA would open the doors for exchanges to come out with many new products like sector-based derivatives and weather derivatives."
This would also stabilise the financial positions of market participants and lead to more stable business profits and individual incomes, Massey added.
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