Commodity regulator gets Refco wake-up call

Even as the collapse of US-based trading company Refco Inc continues to create tremors in Indian markets, commodity market regulator Forward...

Even as the collapse of US-based trading company Refco Inc continues to create tremors in Indian markets, commodity market regulator Forward Market Commission FMC is gearing up to track the members of commodity exchanges more closely.

FMC will be despatching applications containing 30 questions to NCDEX and MCX. The two exchanges will collect data from around 1,000 to 1,500 members in the format prescribed by FMC. The application will seek details of the board of members, partnership information and financial details. 8216;8216;The application will be more or less similar to the one sought by stock market regulator Sebi,8217;8217; said Anupam Mishra, director, FMC.

Refco, which filed for bankruptcy in the US, has a presence in India through its joint venture with Sify. It is a member of both MCX and NCDEX.

To begin with, FMC is in the process of putting in place the required software for building the database. The format of the application forms are almost in the final stages of approval and will be despatched to commodity exchanges soon.

8220;If everything works out as planned we should be having the database of all the members up and running by this year end. Once this process is through, we will make the registration mandatory without which members will not be allowed to trade on the exchanges,8221; said Mishra.

Once the members8217; registration is through, FMC is planning to collect information on traders as well. The members presently cannot directly register with FMC as the law does not provide that power to the regulator.

8216;8216;We have been pursuing the government for more powers. This will have to come through an amendment to Forward Contract Regulation Act, 1952. We are seeking complete autonomy so that we can respond to the problems more swiftly. At present we are doing whatever we can within our limitations,8217;8217; said Dr Kewal Ram, member, FMC.

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The proposal to amend FCR Act has been pending with Parliament for approval. 8216;8216;Autonomy to FMC will mean power to penalise, collect funds from members through charges which can take care of expenses and, more importantly, to take quick actions against manipulators,8217;8217; said Ram. For instance, the database of members which is being done through the commodity exchanges can be directly executed by FMC if it is given autonomous powers. They can even charge a fee from the members for registration.