The market has now come under the unified regulatory watch of the capital markets regulator Sebi, following the merger of 62-year-old Forward Markets Commission with it.
     
Commodities turnover

Having clocked over Rs 100 lakh crore a year in the past, the total turnover at all commodities derivative exchanges in the country slumped to Rs 64.57 lakh crore in 2015.
     
The latest trade data puts the turnover of three national and six regional bourses at Rs 63 lakh crore as on December 10 this year, pegging the total estimated turnover for the entire 2015 at little above the previous year's mark.
     
The industry experts said this kind of turnover has been achieved despite negative headwinds on the pricing and taxation fronts and expectations are high that the business will grow significantly next year if Sebi allows new investors such as banks and foreign portfolio investors in this market.
     
Steps to ensure transparency

The Securities and Exchange Board of India (Sebi) is also working on further steps to ensure transparency in areas like price discovery and risk management.
     
The FMC was merged with Sebi in September this year for better regulation and to ensure there was no repeat of the Rs 5,600 payment default that had surfaced on the spot commodity exchange NSEL in late 2013.
     
The commodities market remained under pressure in 2015 due to fall in prices of gold, crude oil and other agricultural commodities amid farm production concerns. The imposition of Commodities Transaction Tax also affected the daily turnover.
      
There was some volatility in chana, coriander and soyabean futures this year.
      
MCX retained a major market share of over 85 percent in the commodity futures market, followed by NCDEX and NMCE. Besides these three national level bourses, six regional exchanges are operating in the commodities futures market.
      
The business at commodities exchanges has been declining ever since the government slapped CTT on July 1, 2013. Its impact continued in 2015 though slump in prices of commodities like gold and other metals also affected participation and trade volumes this year.
      
The year saw the regulator declaring Praveen Pillai, CEO and MD of Universal Commodity Exchange (UCX) as not 'fit and proper person' to run the bourse due to professional misconduct and financial irregularities. UCX, a national level bourse, had suspended trading operations from early 2014.
     
Another national level bourse, Ace Derivatives and Commodity Exchange suspended futures trading in June due to lack of liquidity, while ICEX, which had shut trade operations in 2014, is looking to pump in money to revive the the bourse.
 
Future of commodities in 2016
    
With the commexes having high expectations from Sebi, it needs to seen whether the regulator will fast-track reforms in the year 2016 for this market.
     
The exit policy would stipulate conditions for exchanges to voluntarily exit the commodity exchange business. National bourse UCX and two regional bourses that have already wound up can make an exit after this policy, the official added.
     
Going forward in 2016, Sebi will look at allowing new products and more participants in the market, but the regulator is not in a hurry and any decision on this would be taken only after discussions with the government.

 

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