The Forward Markets Commission should be transformed into an autonomous, independent and statutory status and should be re-christened Commodity Futures Regulatory Commission, according to Indian Institute of Management, Lucknow (IIL-M).
IIM-L has also recommended that the government should over a period of time, phase out price support to farmers and introduce indirect support in the form of interest subsidy on loans raised against crop collateral.
IIM-L had been appointed by ministry of consumer affairs, food and distribution, and ministry of finance, to provide an independent study on restructuring the emerging market regulator.
It has also suggested a Commodity Derivatives Contract Regulation and Development Act to replace Forward Contracts (Regulation) Act, 1952 to give a new direction with emphasis on self-regulation of exchanges.
IIM-L said the Act should be amended to raise the status of the Commission from an advisory and recommendatory body to the single authority of futures market regulation.
IIM-L recommended that the Commission adopt a case-by-case approach for implementing electronic trading.
Exchanges having a large volume of trade and enough financial strength may be encouraged to opt for electronic trading system, IIM-L said in its report.
The management school stated that the Commission should play a pro-active role in creating infrastructure for a viable and growth oriented trading system.
Together with exchanges, the Commission should utilise all its resources towards the creation of institutional infrastructure for trading, clearing, settlement and delivery.
IIM-L strongly recommended that the Commission should take necessary steps to separate exchanges from vested interest groups so that they could serve larger interests of society.