New directors to join FMC

After functioning under a manpower shortage for two years, the regulator of the commodity futures market has selected seven candidates from the public sector to fill up nine important posts in the 'Forward Markets Commission (FMC)' During this period, cumulative turnover of the market has risen by more than 90% to Rs 73.5 lakh crore.

The candidates will be deputed to the FMC as directors, whose tasks include recognition and upgradation of exchanges, monitoring trade data from exchanges, inspection and audit of exchanges, their members and other intermediaries, market research, price analysis, conducting surveys, and maintaining and developing a database.

Out of 12 directors, FMC currently has only three. The shortage of key staff is delaying the passage of important measures to regulate the markets more effectively. For example, an important measure that FMC wanted exchanges to implement six months ago was issued early this month when the bourses were directed to levy a uniform instead of variable penalty on brokers for the same offence. The new structure, which will come into effect from April 1, ensures that bourses don’t discriminate among their members by treating some too lightly or harshly.

“We would have liked to see the latest measure having been implemented six months ago by the exchanges, but we were stymied by a shortage of staff,” said BC Khatua, chairman, FMC.

The other problem that the regulator faces is an inability to offer market level salaries to attract specialised talent. Unlike other regulators such as Sebi or RBI, FMC is not financially autonomous and so cannot collect fees from exchange members. The penalties it collects go to the government. This makes the commission dependent on government departments which depute their staff to FMC. PSU officials who come on deputation have no specialised knowledge of commodities and have to be trained by the commission. Many a time these officers are prematurely reverted to their parent departments on grounds of staff shortage. Thus the FMC loses its trained manpower after investing time and resources on training them.

“A year ago, I had eight directors. Of these six went away, leaving me with just two directors. One of the current directors was promoted internally and that filled three posts,” said Mr Khatua.

The ability to attract talent will become possible only if an act providing financial autonomy to the FMC is passed by Parliament. The FCRA (Amendment) Regulation Bill, which has been hanging fire for many years, is presently lying with the FMC’s parent ministry, the consumer affairs ministry. Being a money bill, this will have to be passed first by the Lok Sabha and then the Rajya Sabha.

However, till this all-important bill is passed, FMC will have to stay content with regulatory powers devolved to it by its parent ministry.

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source The Economic Times