Futures trading declines 7 percent in Q1

Kochi, Aug 17 (UNI) Futures trading in commodities declined by almost seven per cent in Q1 of 2007-08, compared to the same period last year, Forward Markets Commission (FMC) Chairman B C Khatua said today.

Talking to newspersons during the launch of Federal Bank's scheme for 'Financing Delivery-Based Trade through Commodity Exchanges' here, Mr Khatua said high volatility of certain commodities affected the volume of trade.

The ban on trading of essential commodities like wheat and certain pulses could also had caused the decline, he said.

Stating that futures trading faced a lot of ''operational constraints'' as the market was still at a nascent stage, he said there was a need for more players and better infrastructure to ''deepen and widen'' the scope of the market.

''Given the constraints faced by the market, the decline is not very significant,'' he added.

Stressing the need to check the dominance of speculators in futures trading, he said the limited presence of people with direct access to the physical market could lead to unnautural pulling of the futures market away from the cash market.

He said the Abhijit Sen committee report on the impact of futures trading on commodities was expected to be submitted to the government later this month.

As for the amendments proposed to the FMC Act, he said the bill was to be reconsidered by the cabinet in the light of certain observations made by the Parliamentary Standing Committee.

Asked about the lifting of the ban on futures trading in wheat and pulses like 'urad' and 'toor' and restrictions on pepper and cumin, Mr Khatua said the curbs were not likely to be lifted before the harvest season.

Responding to demands raised by some quarters for a ban on futures trading in rubber, Mr Khatua said slight aberrations in the market should not lead to panic.

Regarding the problems faced by regional exchanges, the FMC Chairman said he was going to convene a meeting of the small exchanges in October this year to discuss these issues.

UNI