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Forward Markets Commission (India)

The Forward Markets Commission (FMC) is the chief


regulator of commodity futures markets in India. As
of July 2014 for the year 2014-15, it regulated Rs 17
trillion
[1]
worth of commodity trades in India. It is head-
quartered in Mumbai and this nancial regulatory agency
is overseen by the Ministry of Finance.
1 Commission
Established in 1953 under the provisions of the Forward
Contracts (Regulation) Act, 1952, it consists of not less
than two but not exceeding four members appointed by
the Central Government, out of them one being nomi-
nated by the Central Government to be the Chairman of
the Commission. Currently Commission comprises three
members among whom Shri Ramesh Abhishek, IAS is
the Chairman, Dr. M. Mathisekaran, IES and Shri Na-
gendraa Parakh are the Members of the Commission.
Currently, the Commission allows commodity trading in
22 exchanges in India, of which 6 are national.
1.1 Chairman of FMC
Mr. Ramesh Abhishek is the Chairman of commodities
regulator FMC. He is an IAS Ocer of 1982 Batch (Bi-
har Cadre) and was appointed on 24 September 2012 as
the Chairman of Forward Market Commission. Mr. Ab-
hishek, an alumnus of the Harvard Kennedy School, holds
post graduate degrees in public administration and inter-
national relations.
1.2 Members of FMC
1.2.1 Dr M.Mathisekaran
Dr M.Mathisekaran belongs to 1981 batch Indian Eco-
nomic Service. He has Post Graduate Degree in Eco-
nomics fromMadurai Kamraj University, M.Sc (National
Development Project Planning) from University of Brad-
ford, UK and Ph.D from University of Madras.
Before joining IES, he had worked as Assistant Profes-
sor of Economics from 1978 to 1981.After joining IES,
he has worked in various capacities in dierent organiza-
tions of the Government of India. He had worked in the
Programme Evaluation Organization of Planning Com-
mission in the regional oces at Hyderabad, Mumbai and
Chennai. He had also worked as Chief Vigilance Ocer
in the Tuticorin Port Trust and General Manager (Vigi-
lance) in Food Corporation of India. He was on depu-
tation with Tamil Nadu Government from 8.11.2008 to
30.5.2011.
Before joining as Member, Forward Markets Com-
mission he has worked as Economic Adviser,FMC
from 12.12.2007 to 31.10.2008 and 31.5.2011 to
15.12.2011,As Director,FMC from 9.10.1990 to
5.6.1991 and as Deputy Dirtector,FMC from 27.6.1998
to 15.11.1989.
1.2.2 Shri. Nagendra Parakh
Shri. Nagendra Parakh is a rank holder Chartered Ac-
countant (CA) and Company Secretary (CS) by profes-
sional Qualications. He qualied CA and CS in 1985-
86.
Before joining FMC in July 2013, Shri. Parakh was
working as Chief General Manager at SEBI, During his
career with SEBI since 1994, He was associated in var-
ious reforms in the Indian Securities market like on-line
trading, demeterialisation, rolling settlement etc. He was
key person behind introduction of the Equity Deriva-
tives Market and T+2 rolling settlements in Indian secu-
rities Markets. He was SEBI nominee director on the
board of Bangalore Stock Exchange, Cochin Stock Ex-
change, Derivative segment of National Stock Exchange
and Derivative segment of The Stock Exchange Mumbai.
Besides he has represented SEBI in various committees
set up by Reserve bank of India, Ministry of Finance and
Govt. of India. He was also a member representing India
on the Standing committee II of the IOSCO.
Nagendra Parakh carries with him varied regulatory ex-
periences of Indian and global Securities market.
2 History
From 2013 september 09, the commission is overseen
by the Department of Economic Aairs, Ministry of Fi-
nance. Since futures traded in India are traditionally on
food commodities, earlier it was overseen by Ministry
of Consumer Aairs, Food and Public Distribution (In-
dia).
[2]
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2 5 EXTERNAL LINKS
2.1 Development of the Industry
India has a long history of trading commodities and con-
sidered the pioneer in some forms of derivatives trading.
The rst derivative market was set up in 1875 in Mumbai,
where cotton futures was traded. This was followed by
establishment of futures markets in edible oilseeds com-
plex, raw jute and jute goods and bullion. This became
an active industry with volumes reported to be large.
However, in 1935 a law was passed allowing the gov-
ernment to in part restrict and directly control food pro-
duction (Defence of India Act, 1935). This included
the ability to restrict or ban the trading in derivatives
on those food commodities. Post independence, in the
1950s, India continued to struggle with feeding its popu-
lation and the government increasingly restricting trading
in food commodities. Just at the time the FMC was es-
tablished, the government felt that derivative markets in-
creased speculation which led to increased costs and price
instabilities. And in 1953 nally prohibited options and
futures trading altogether.
[3]
The industry was pushed underground and the prohibition
meant that development and expansion came to a halt. In
the 1970 as futures and options markets began to develop
in the rest of the world, Indian derivatives markets were
left behind. The apprehensions about the role of specula-
tion, particularly in the conditions of scarcity, prompted
the Government to continue the prohibition well into the
1980s.
The result of the period of prohibition left India with
a large number of small and isolated regional futures
markets. The futures markets were dispersed and frag-
mented, with separate trading communities in dierent
regions with little contact with one another. The ex-
changes had not yet embrace modern technology or mod-
ern business practices.
3 Responsibilities and functions
The functions of the Forward Markets Commission are
as follows:
To advise the Central Government in respect of the
recognition or the withdrawal of recognition from
any association or in respect of any other matter aris-
ing out of the administration of the Forward Con-
tracts (Regulation) Act 1952.
To keep forward markets under observation and to
take such action in relation to them, as it may con-
sider necessary, in exercise of the powers assigned
to it by or under the Act.
To collect and whenever the Commission thinks it
necessary, to publish information regarding the trad-
ing conditions in respect of goods to which any of
the provisions of the act is made applicable, in-
cluding information regarding supply, demand and
prices, and to submit to the Central Government, pe-
riodical reports on the working of forward markets
relating to such goods;
To make recommendations generally with a view to
improving the organization and working of forward
markets;
To undertake the inspection of the accounts and
other documents of any recognized association or
registered association or any member of such asso-
ciation whenever it considers it necessary.
It allows futures trading in 23 Fibers and Manufacturers,
15 spices, 44 edible oils, 6 pulses, 4 energy products, sin-
gle vegetable, 20 metal futures, 33 others Futures.
4 References
[1] extquotedbl[1] extquotedbl. FMC.
[2] Gargi Parsai (10 September 2013). Forward Markets
Commission comes under Finance Ministry. The Hindu.
[3] Frida Youssef (October 2000). Integrated report on
Commodity Exchanges And Forward Market Commis-
sion (FMC) extquotedbl. FMC.
5 External links
Forward Markets Commission Ocial Website
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6 Text and image sources, contributors, and licenses
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