New Delhi: The maturity of commodity futures market in the country is not only judged by the volume of trade but also by its ability to perform the functions of price discovery and price risk management, Food and Consumer Affairs Minister K V Thomas said on Saturday.
"The maturity and development of the markets (commodity futures) cannot be judged merely by its volume of trade. The market has to perform the important function of price discovery and price risk management," Thomas said.
Speaking at an international convention on 'Commodity Futures Market- Building the Nation', the minister said futures markets are presumed by many as fuelling speculation in prices of food commodities.
"Changing this perception is a major challenge and it can be achieved by active participation of the farmers and the consumers apart from the stock exchanges and the brokers," he said.
The convention organised by Commodity Participants Association of India (CPAI) in association with market regulator Forward Markets Commission (FMC) focused on the proposed Forward Contract Regulation Act (FCRA), integration between spot and future market, among other issues.
Ministry of Consumer Affairs Secretary Pankaj Agrawal said the role of the regulator is to ensure the integrity of the system but it is the job of the commodity markets to ensure customer protection.
Echoing similar views, FMC Chairman Ramesh Abhishek said it is necessary for the stakeholders in the commodity futures markets to ensure investor protection.
"It is important that the financial integrity of the commodity markets is maintained as well as the investments of the customers are safe. Then only can we ensure increased participation from all, including the farmers, whose interest is most important for the market's growth," he added.
Jignesh Shah, Vice-Chairman of India's largest commodity exchange MCX, said, "The markets in the country are about to complete a decade in operation and they have come a long way from starting from a small turnover to crossing Rs 180 lakh crore in the last fiscal".