ADDRESS BY HON’BLE MINISTER FOR CONSUMER AFFAIRS,
FOOD & PUBLIC DISTRIBUTION, SHRI SHARAD YADAV ON THE
OCCASION OF LAUNCHING FUTURES TRADING IN WHEAT AND
RICE BY THE NATIONAL MULTI-COMMODITY EXCHANGE OF
th DATE : 13 December, 2003
Time : 5.00 p.m.
Venue : Panchvati, 7 Race Course Road,
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Commodity futures market in India is one of the oldest in the world. We
institutionalized futures trading at the Bombay Cotton Trade Association in
1875, with contracts. Futures trading in many other commodities like
oilseeds, foodgrains and bullion were doing well during the pre-independent
days and in the 50s led to banning of futures trading in most of the
commodities. The revival started in the mid 90s with liberalization of the
economy and agricultural sector in particular.
2. Our Government have taken several measures to revive and accelerate
futures in the past few years.
? Between August 2002 and April 2003 prohibition on futures trading in
st81 commodities was removed. From April 1 2003 therefore all
commodities are permitted for futures trading. This was a major
decision of the Government considering the fact that we had only 6
commodities, and that too low volume once, allowed for futures
trading in 1997.
? In our endeavor to reach the benefits of commodity futures treading to
all parts of the country trading facilities have been extended to the
State of Jammu & Kashmir for the first time in September, 2003.
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? In its efforts to remove restrictions on physical trade in commodities
the Government removed party-to-party forward contracts in
commodities ( NTSD contracts) from the purview of the Forward
Contracts ( Regulation) Act.
th? Following the announcement of the Hon’ble Prime Minister on 15
August, 2002 four nation wide multi commodity exchange have been
approved by the Government during January-February 2003. One of
them ( National Multi-Commodity Exchange of India, Ahmedabad) is
today commencing futures trading in wheat and rice, the most
voluminous basic consumption goods of the masses. This event is
specially significant as we enter a major phase in futures trading.
3. One important area of focus, which I am personally interested is,
awareness generation about commodity futures trading both its advantages
and limitations. We have done a lot in encouraging futures trading in terms
of additional commodities, modern institutions and a host of related policies.
Unless the message regarding the benefits of futures trading reaches the
ultimate beneficiary – the producer – our efforts may not be fully successful.
A concerned effort from the part of all of us will be required for the same.
4. Modern commodity Exchanges are critical in the context of opening
up of the entire set of commodities for futures trading. In fact the “best
practices” suggested for implementation in the Exchanges such as online
trading, daily mark to market margining, time stamping, professional,
independent Directors, computorised operations, electronic trading, modern
settlement and clearing practices so on are all with the purpose of making
our futures trading at par with the rest of the world. These practices are
adapted from mature markets since commodity derivatives trading, will be
hereafter benchmarked upon global standards.
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5. What is emerging is a combined effort of all the stakeholders, the Government including the Regulator, the Exchanges and their members, and important ancillary institutions such as warehouse. We are also aware that the regulatory structure needs to be strengthened and thus is one of our priority areas of action. The Government appointed Experts (IIM, Lucknow) and set up high level Task Force ( Inter Ministerial Task Force on Convergence and Securities and Commodity Derivatives Markets) during this year and both their Reports have recommended strengthening of the Forward Markets Commission.
6. The Presence of Hon’ble Prime Minister gives my Ministry and me
great strength in carrying forward and remaining reform agenda. I am very grateful to him for all his support and guidance.
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