India regulator sees no reason for commod futures ban

By Sourav Mishra and Rosemary Arackaparambil

MUMBAI (Reuters) - India's commodities futures markets are operating efficiently and transparently and there is no reason to ban any commodity from trading, the chairman of the Forward Markets Commission said on Monday.

Media reports that the Left, a crucial partner in the government, had sought a ban on futures trade in essential commodities to rein in prices has hurt market sentiment.

Wholesale price inflation shot up to a three-year high of 7 percent in the 12 months to March 22, fuelled by a rise in the prices of food items, edible oils, iron ore and steel products.

India banned futures trade in wheat, rice, urad and tur last year on concerns speculators had fuelled prices and inflation.

"Banning commodities selectively doesn't help anybody," B.C. Khatua, who took charge 10 months ago, told Reuters.

"Either you have a market that is well regulated and functioning well, or it doesn't. You can't say the market is operating efficiently for XYZ commodities and not operating efficiently for ABC commodities."

Unlike the autonomous stock market regulator, Securities Exchange Board of India, the FMC is under the federal food and consumer affairs ministry. The ban on some futures contracts last year was a government decision.

An ordinance to give the FMC more teeth lapsed on Monday, but the bill is pending in parliament. Parliament is in recess and will resume session on April 15.