India may move to beef up its commodity markets regulator at a cabinet meeting this week with new legislation to make it fully independent and armed with punitive powers, a minister said on Tuesday.
Unlike India's autonomous stock market regulator, the commodities regulator, known as the Forward Market Commission (FMC), is controlled by the Consumer Affairs Ministry and needs to seek government permission for many decisions.
"We are going to bring an ordinance this month to strengthen the Forward Markets Commission. The cabinet meeting is on January 24," Food Processing Minister Subodh Kant Sahai said.
"The main point is that the Forward Market Commission will become autonomous. Today, it is an attached office of the government," FMC Chairman B.C. Khatua told reporters when asked to explain the impact of the new laws, if approved.
"Many people do not know about commodity futures as it is relatively new here. To bolster people's confidence in the trade the regulator must have adequate powers to avoid any manipulation or excessive speculation."
He said strengthening the regulator would likely enable banks and financial institutions to enter commodities bourses and deepen trading.
The changes would also help the introduction of options trading in commodities, the minister said.
"I think the government plans to make the FMC independent like (stocks regulator) SEBI and give more punitive and regulatory powers," Anjani Sinha, managing director and CEO of the National Spot Exchange said.
"With more powers at its disposal, the FMC will be able to curb volatility and punish those who may try to manipulate the trade. It will help bring more transparency."
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