FMC lays down exit policy for defunct commexes
The Forward Markets Commission (FMC) on Wednesday issued a circular, laying down procedures for commodity exchanges (commexes) that have suspended trading to return the money of members. It also decided to issue a notice to cancel recognition of those exchanges where no trading had taken place in the past 12 months.
Among recognised commexes, Indiabulls and MMTC anchored I-CEX will be issued a show-cause notice regarding withdrawal of recognition, three regional comexes will also be issued notices. As a policy, FMC has decided that “after the suspension of trading, the trade margin money of clients deposited with the exchange shall be refunded within 15 days, and in 60 days it has to resolve complaints, pertaining to trade/settlement related matter, or any other matter, relating to exchange operations.”
The exchange also has to “ensure that within six months from the suspension of trade, all the trade-related complaints/grievances are resolved/settled”. After a period of six months from the date of suspension of trade, the exchange shall refund the cash and non-cash components of the trade margin capital and base minimum capital, along with other deposits and collateral, if any, to all the members, provided there are no other claims.
FMC has kept open window for exchanges to resume trading and recollect base capital, margins, etc, but if trading remains suspended, or no trading took place for 12 months, then the regulator will issue a show-cause notice to such exchanges. The regulator has said, “In case the exchange is not in a position to revive its trading operations within 12 months from the date of suspension of trading, then a show- cause notice shall be issued by the commission to the exchange to explain as to why its registration shall not be cancelled and why the commission should not recommend withdrawal of its recognition to the Central government.” I-CEX will be the first exchange to receive a notice. However, another national exchange, Universal Commodity Exchange could be another, as there has been no trading for 10 months.
There were 16 regional commodity exchanges, of which six have recognition but no trading has happened in three of those. All three will be issued a notice. According to an FMC official, notices might also be sent to Cotton Association of India, Bombay Commodity Exchange, and the Sangli-based Spices and Oilseeds Exchange.
MMTC anchored I-CEX will be the first exchange to receive a notice cancelling recognition of those exchanges where no trading has taken place in the past 12 months