Date:04/11/2006 URL: http://www.thehindu.com/2006/11/04/stories/2006110406891600.htm

Business

FMC plans carbon trading

Special Correspondent

Awaits Govt. nod for allowing FIIs, MFs in futures

CHENNAI: The Forward Markets Commission is discussing a proposal to introduce trading in carbon credits, according to the Chairman of the commission, S. Sundareshan.

Replying to questions at a press conference, Mr. Sundareshan said, "who would have imagined even three or four years ago that India would have a futures market in oil and natural gas", indicating that introduction of carbon emission trading was not far into the future.

The FMC Chairman expressed the hope that the FMC's recommendation to the government to allow foreign institutional investors (FIIs) and mutual funds to participate in commodities futures would be accepted, and would become a reality once the legislation pending before Parliament for amending the Forward Markets (Regulation) Act, 1952, to confer autonomy on the FMC, was passed. He said the only way the retail investor would be able to participate in commodity futures was to allow mutual funds into the market. The bill would also allow starting of options in commodity markets.

Mr Sundareshan said gold accounted for the largest turnover among all commodities in the Multi-Commodity Exchange (MCX) and hence it was not true that absence of an inter-bank spot market in gold was a hurdle to deepening of bullion futures.

He said the FMC had issued no-objection certificates for the establishment of brokerages abroad by six or seven Indian entities for trading in foreign commodity futures markets.