Indian commodities regulator calls for position disclosure

MUMBAI Wed Aug 8, 2012 6:30pm IST

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MUMBAI Aug 8 (Reuters) - India's commodity exchanges will have to disclose all trading positions of members and their clients from Aug. 13, the markets regulator told Reuters, in a bid to boost transparency and cut volatility as a drought ramps up farm goods prices.

"Whatever the proportion of proprietary and client trades in a commodity, the exchanges have been asked to display on the websites," Ramesh Abhishek, chairman of the Forward Markets Commission, told Reuters.

Large participants in the futures market may be asked to disclose their physical market activity, Abhishek, who is responsible for regulating farm commodity futures markets, said.

The FMC oversees markets with about 11 trillion rupees ($200 billion) of monthly turnover -- the third biggest in the world after the United States and China, but open only to domestic players.

India is facing its first drought in three years and concerns over output have pushed prices of some commodities such as chick peas, soybean and edible oils to historical highs. Th e government had said futures trading was under the spotlight.

The regulator may also ask exchanges to make checks on the financial strength of members, including their net worth and their exposure on contracts as well as their losses.

The regulator has not taken any decision on re-launch of guar futures, which were suspended in late March due to allegations of price manipulation, he added. ($1 = 55.1550 Indian rupees) (Reporting by Siddesh Mayenkar and Rajendra Jadhav; Editing by Jo Winterbottom)

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Comments (1)
VinayShah wrote:
Just to placate the Exchanges which have been opposing disclosure requirement of the type, “Commitment of Traders” introduced by the Commodity Futures Trading Commission (CFTC), the FMC has come out with this disclosure requirement. Despite the tall claim that it would improve transparency and curb volatility in the face of drought, it’s utility to the regulator or market participants is doubtful. Does the FMC want to say that now that this disclosure requirement has been introduced, the suspension of guarseed and guargum contracts would be revoked? The most potent weapons are limits on open interest and initial/additional margins and not this disclosure requirement which only adds to the regulatory compliance burden.

Aug 09, 2012 2:21pm IST  --  Report as abuse
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