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"FMC will first be strengthened just like Sebi has been over the years," Finance Minister P Chidambaram told reporters after the Cabinet meeting. A Bill will be introduced in Parliament during the Budget session to amend the Forward Contracts (Regulations) Act.
The Cabinet's decision to strengthen the FMC puts on the backburner the earlier proposal of the finance ministry to merge it with the Sebi. The Cabinet, at its meeting on Thursday, decided to revisit the issue of convergence after three years. "The Securities Appellate Tribunal, which hears appeals against the orders passed by the Sebi, will also take up appeals against FMC's orders," Chidambaram said.
"The Bill paves the way for FMC to become an independent and autonomous market regulator. Once the Bill is passed, FMC will be able to generate its own resources and have the powers to recognise or derecognise futures commodities exchanges," FMC Chairman S Sundereshan told Business Standard over phone. At present, the FMC is an arm of the consumer affairs ministry.
The amendment Bill provides for corporatisation and demutualisation of the existing commodities exchanges and setting up of a separate Clearing Corporation. The penal provisions in the FCRA will be strengthened to give more teeth to the commodities regulator.
The amendments will permit trading in options in goods, registration of intermediaries with FMC and redefine commodities.
