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Friday, February 06, 2009

NCDEX vs. FMC, continued

I had blogged about NCDEX vs. FMC a few days ago. Today in Financial Express, MCX has a defence. I found it interesting that it was MCX that was responding to criticism of FMC.

The comments on my blog post are quite interesting. In particular, Anonymous says that pages 28-48 of this document are relevant for us. I agree; the document is hair raising and insightful on scams and regulators; everyone interested in finance in general, and crooks and their regulators in particular, should read it. Jayanth Varma has also blogged this document.


  1. "HC rejects NCDEX plea on transaction charges"

    Sir, your comment on this story is warranted.Do you really think we can take our country to next level with this kind of unjust. How can we just continue looking at this in the current form.

    My sincere apology for Anonymity.

  2. It seems that the hon'ble court did not go deep into the issue and its background. Everyone was surprised at the swift pace at which the matter was decided:in just one hearing. The judgment says that when the expert body (read FMC) had asked NCDEX to take their circular back until they reach a final decision, the petitioner had no case for a writ against FMC. However, NCDEX seemingly challenged the very jurisdiction of FMC in the matter which somehow, the court did not examine. FMC, off-late has been trying to become self appointed regulator in areas beyond its purview, esp. in the areas where there is a lack of clarity. Granting MCX permission for trading electricity futures when MCX failed to get one from CERC is a case in point. Such situation need a thorough and immediate public debate and clarity should emerge, else the 'regulatory arbitrage' would only increase. For NCDEX, they must go to the higher court now, for the case of exchange industry at large. If they take it lying down, it would set a wrong precedent, and who knows tomorrow the MCX could be at the receiving end, if a more 'influential' competitor emerges on the scene.

  3. Dear Sidhartha Surana,
    The order of the High COurt was not passed in haste. It was not prounounced from the bench instantaneoulsy. It was reserved for orders and after three days, oders were passed.

    The Cout has first and foremost held that FMC had powers to stay the pricing cirucalar of NCDEX.

    THe court did not even wait for the reply of FMC since NCDEX had mad a high pitch on the ground of urgency.

    While it is necessary to highlight the powers or lack of it of FMC at various fora by all stake holders, turning the debalte on one sinlge entitiy called MCX is depolable and it is hitting below the belt.

    It could have been avoided.

  4. In court FMC chairman admitted he knew about the NCDEX decision 24 hrs before. However, he was at CNBC claiming ignorance and surprise on NCDEX order.

    Why would a regulator be bothered on transaction chargesi unless it has vested interest.

    FMC could be called F.MC..(X) for all practical purposes in its alst two years regime. All the glib about increase in commodity futures is only increase in bullion segment: speculative and non delivery based.
    For such non-delivery based ocntarcts government do not need FMC kind of organisation and waste taxpayers money.

    SEBI woudl be good enough to regulate such contract.

    The reason why FMC was created was to help agri-commodity futures.

    However, FMC seems to pay lip service to agri-commodity futures and focus on no-delivery based contarcts e.g. Electricity, Bullion, energy. Obvisoly FMC is inetersted in false pride.

    Why would he iauguarate a spot pulse contract of a MCX group company when he has no obvios link.

  5. Criticising me is perfectly okay in comments but vituperation is not. See the rules of the game once again. This blog is a place for intellectual arguments.

  6. Mr. PK Singhal, who was a nominee director of FMC on NCDEX Board till a coupel of montsh ago has joined MCX-SX as executive director.

    It siw orthwhile to metion that MCX-SX, MCX has many similar directors and are in direct competition with NSE-SX, NCDEX.

    So much for FMC and MCX collaboration and our regualtions???


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