MUMBAI: The Forward Markets Commission (FMC) has stated that real time trading in a commodity by opening the terminals of foreign commodity exchanges in India without the prior approval of the Central Government or the FMC would be considered illegal.

"Real time trading in a commodity by opening the terminals of foreign commodity exchanges in India without prior approval of the Central Government or FMC, as the case may be, would be deemed as illegal and persons entering into such contracts would be punishable under Sec. 21 of the Forward Contracts (Regulation) Act, 1952," the FMC stated in a release on Tuesday.

It also stated that the issue of foreign commodity exchanges and their members placing dedicated computer terminals in India has been examined by the Forward Markets Commission with reference to the provisions of Sec. 15 and Sec. 18 read with Sec. 11 and Sec. 21 of the Forward Contracts (Regulation) Act, 1952.

Sec. 21 of the Act stipulates penalty for owning or keeping a place used for entering into forward contracts in goods other than that of a recognised association.

Sec. 11 deals with the power of recognised associations to make byelaws, Sec. 15 with forward contracts in notified goods being illegal or void in certain circumstances and Sec. 18 gives special options to the Central Government in respect of certain kinds of forward contracts.

It is clarified that forward contracts, other than those that are: (a) entered into between members of a recognised association or through or with such members in goods that are notified under Sec. 15; (b) complying with the bye-laws of recognised exchanges and (c) not in violation of any contract specification, would be considered illegal and void.

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