Lok Sabha Question No. 4915 (UNSTARRED), answered on 2017-03-31
Subject: Forward Markets Commission
Ministry: FINANCE
Asked by: RAMDAS CHANDRABHANJI TADAS

## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO.4915

ANSWERED ON 31s MARCH, 2017

## FORWARD MARKETS COMMISSION

4915. SHRI RAMDAS C. TADAS:

Will the Minister of FINANCE be pleased to state:

- (a) The major functions of Forward Markets Commission (FMC) along with role played by it in commodity trading in agriculture sector;
- (6) The extent by which the FMC has brought about transparency in the agriculture sector and enabled the farmers to discover the market for agriculture products; price
- whether the Government has received a number of complaints with regard to the functioning of the said Commission the last three years and the current year; during and
- d) if s0, the details thereof with the action taken thereon? along

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

(a) In  compliance of the   provision of the Finance 2015, the Forward Markets Commission(FMC) , Mumbai was dissolved we.f: 28.09.2015 and its commodities derivatives markets regulatory functions were made over to the Securities and Exchange Board of India Mumbai w.e.f: 29.09.2015. Act;

Prior to been dissolved, FMC was & regulatory authority for futures trading in agricultural as well as nonagricultural commodities. Its functions included: having

- a. To advise the Central Government in respect of the recognition O the withdrawal of recognition from any association or in respect of any other matter out of the administration of the Forward Contracts (Regulation) Act 1952. arising
2. b To forward markets under observation and to take such action in relation to them, as it may consider necessary; in exercise of the powers assigned to it keep by '
3. C To collect and whenever the Commission thinks it necessary; to publish information regarding the trading conditions in respect of goods to which any of the provisions of the Act is made applicable, including information regarding supply, demand and prices, and to submit to the markets relating to such goods;
4. e\_ To undertake the inspection of the accounts  and other documents of any recognized association or registered   association or any member of such association whenever it considers it necessary.
- d. To make recommendations generally with a view to improving the organization and working of forward markets;

In order to protect market integrity; the FMC used to prescribe the following measures:

- 1 Limit on open position of an individual members as well as client to prevent over
- iii. Special margin   deposits to be collected on outstanding   purchases or sales to curb excessive speculative activity through financial restraints;
- ii. Limit on fluctuation (dailylweekly) to prevent abrupt upswing o downswing in prices; price

In addition to the above measures, the regulator used to call for reports from the Exchanges and takes steps to ensure that there is no misuse of the market and that the prices reflected on the Exchange platform are governed by the demand and supply factors in the physical markets daily

- b) FMC implemented the Central Sector Scheme Strengthening of FMC since 2005-06. The ultimate objective of this Scheme was to establish a well-regulated commodity futures market that provides an efficient platform for discovery and risk management with increased and informed participation by all constituents including farmers This Plan scheme included one of the important components of connectivity of commodity exchanges with Agricultural Produce Market   Committees (APMCs) Post   offices Cooperatives Rural Extension Centres AGMARK NET and other agricultural marketing networks for dissemination of future prices: price price
2. (c) & (d) FMC has ceased to exist since 28.09.2015. Certain complaints about the role of FMC in the past in the matter of regulating commodities exchanges such as National Spot Exchange Limited etc. are sporadically received which are examined/referred to agencies concerned for appropriate action.