The Union Cabinet today
approved the proposal to move official amendments to the Forwards
Contracts (Regulation) Amendment Bill, 2010 (the Bill, 2010), based upon
the recommendations of the Parliamentary Standing Committee of the
Ministry of Consumer Affairs, Food & Public Distribution in its 15th
Report, in the next session of Parliament.
After the Bill is passed and enacted by Parliament, Forward Market
Commission (FMC) as a regulator will get autonomy and power to regulate
the market effectively. New products like `options` will be allowed in
the commodity market. This will benefit various stakeholders including
farmers to take benefit of `price discovery and `price risk management`.
The Bill would enhance public accountability of the Regulator by
providing for an Appellate Authority.
The recommendations of the Committee with regard to definition of the
"Commodity Derivative" in Clause 3, establishment and constitution of
Forward Markets Commission in Clause 4, term of office of the Chairman
and every other whole time members in Clause 5, accounts and audit in
Clause 9, penalties for contravention of certain provisions of Chapter
IV in Clause 25 of the Bill, 2010 have been accepted and are proposed to
be incorporated as official amendments. The amendment in Clause 25 will
require consequential amendment in Clause 26, which is also proposed to
be included in the official amendments.
The Forward Contracts (Regulation) Act provides for the regulation of
commodity futures markets in India and the establishment of the Forward
Markets Commission (FMC). While the markets have been liberalized with
effect from April, 2003 and modern institutional structures are in the
process of being evolved, yet the market regulator, FMC is largely
functioning in its traditional format.
Many of the existing provisions of the Forward Contracts (Regulation)
Act need changes to strengthen and reinforce legal provisions to meet
the requirements of changing environment. In order to amend further the
Forward Contracts(Regulation) Act, the Bill, 2010 was introduced in the
Lok Sabha on 6.12.2010. The Bill, 2010 went through examination by the
Committee which submitted its 15th Report on 22nd December, 2011.