The Hindu : Business : Need for farmers’ entry in commodities futures

Online edition of India's National Newspaper
Saturday, Nov 24, 2007
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Need for farmers’ entry in commodities futures

Corporate Reporter

Banks and NGOs can act as aggregators of farmers
Call for stringent and responsive regulation

CHENNAI: The commodity futures market was preparing itself for the next phase of growth which would see greater participation of hedgers, corporate entities, exporters, processors and producers, according to B. C. Khatua, Chairman, Forward Markets Commission (FMC). He was here in connection with a meeting of members of commodity exchanges in the South Zone. Mr. Khatua said FMC was holding such meetings to discuss various market related issues and to understand the impact of regulatory measures taken by the commission on the market.

He said cooperative bodies, banks and NGOs could act as aggregators of farmers for participation in the commodity futures. Various aggregation models, with or without financial support from banks, may be piloted in the market place by commodity exchanges to facilitate farmers participation in the futures market. In order to ensure grater participation in the market, there was need for more stringent and responsive regulation that would increase the confidence of market participants in the market transparency, efficiency and integrity and maintain financial integrity.

Mr. Khatua highlighted the need of various confidence building measures such as strengthening of legal framework, educating clients on the risks and rewards involved in commodity trading and strengthening of capital and corporate governance structure of the intermediaries.

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