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.
Khatua’s 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.
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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 it’s 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’.
