The main regulatory body responsible for commodity futures trading in India is the Forward Market Commission (FMC). The FMC, whose headquarters are located in Mumbai, is the regulator of the commodities futures market, akin to the role of the Securities and Exchange Board of India (SEBI) in the stock market. The FMC’s purpose is to set the terms for how commodity futures trading occurs fairly, transparently and efficiently.
Key Responsibilities of FMC
These include:
- Advising the Central Government in the matters of granting or withdrawing recognition to associations engaged in commodity futures trading;
- Advising the Central Government on matters which arise out of the administration of the Forward Contracts (Regulation) Act, 1952
- Exercising powers assigned to it under the Act to take necessary actions when required
- Proposing means to improve how forward markets operate
Merger with SEBI
FMC has been merged with SEBI to form a single regulatory body. Such a move streamlines the regulatory and oversight functions of commodity futures trading, increasing its efficacy and efficiency.
FMC and Its Regulatory Role in Commodity Futures Trading
The FMC puts rules for investor protection and regulatory framework in place. The FMC has the authority to refuse registration of entities that do not comply with the rules, regulations or orders under the Forward Contracts (Regulation) Act, 1952 and take enforcement actions against those found engaging in unfair practices.
The FMC enhances the mutual collaboration with other regulatory authorities and participates in stakeholder arrangements to present transparency, accountability, and fairness in commodity futures trading.
Conclusion
The commodity futures market of India is regulated by the Forward Market Commission, whose merger with SEBI resulted in a comprehensive regulatory framework to strengthen the protection of investors. As commodity futures trading continues to thrive, regulators like FMC will continue to play an important role for investors. To execute profitable trades in this market, use Upstox, a trusted, insured platform that offers guidance to ensure that you enjoy a seamless trading experience.