The chairman of the Forward Markets Commission (FMC),the regulator of the commodities market under the ministry of consumer affairs,has got a one-year extension. BC Khatua,whose tenure as the FMC chairman was to end on July 31,2010 will now continue till July 31,2011. I propose to continue the reform plans initiated by the Commission in the last couple of years. Priority will be given to protect the interests of investors, Khatua said. Before his FMC assignment,Khatua,an IAS officer of the 1976 batch,was the Commissioner of Sales Tax,Maharashtra. Khatuas latest proposal is to discontinue the system of sub-brokers and instead bring in authorised persons who will provide clients access to the members of the commodity exchanges. Over 15,000 sub-brokers mostly from the the Multi Commodity Exchange (MCX) operating on commodity exchanges are now jittery over the move by the FMC. Khatua defended the FMC move saying that such a step was required to make the markets safer and improve their efficiency. More than anything else,we want to protect the interests of investors. Now its found that these sub-brokers are handling the funds of investors. They handle cheques and deal directly with clients. Many of them are not properly educated and trained for handling such matters, Khatua said. FMC hereby directs commodity derivative exchanges to discontinue forthwith the system of sub-brokers. Members of commodity exchanges will be allowed to provide the market access to their clients only through authorised person by the exchange, FMC said in a notification to commodity exchanges. They were given only 60 days by the FMC to comply with the new stipulation and bring authorised persons. According to Khatua,the proposed authorised persons wont be allowed to receive or pay any money or deal in derivatives in its/ his own name or account. All receipts and payments of money and dealings in commodities will be in the name or the account of the concerned member. These authorised persons will receive their remuneration for their services only from the member of the exchange. We dont want any money transaction between authorised persons and clients, he said. FMC had said individuals,partnership firms and body corporates can become authorised persons. The new requirement will also reduce time for registering authorised persons as commodity exchanges will be granting or refusing the registration, said a market source. The FMC move is similar to the reforms initiated by Sebi in stock markets. Last year,Sebi had made it mandatory for broking firms to provide access to clients through authorised persons with a view to expanding the reach of the markets for exchange traded products.
