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Reliance ADAG, Kotak may be allowed to start comexes soon

September 30, 2008 15:09 IST

Anil Ambani-led Reliance and the Kotak group may soon get the regulatory clearance for their proposed commodity exchanges, with the Forward Markets Commission looking to finalise new guidelines for preventing conflict of interest in ownership of bourses by the end of October.

The regulator has been working on preventing any possible conflict of interest a promoter of a commodity exchange may have between their roles of running the exchange and other businesses such as broking and trading.

"So far, we had two rounds of meeting in this regard. We are resolving the issues and guidelines would be finalised by the end of October," FMC Chairman B C Khatua told PTI. The proposed guidelines will be discussed with the ministry of consumer affairs officials before finalising them, he said.

Khatua had earlier said the regulator was well aware of the danger of conflict of interest and clearances would not be given to Reliance and Kotak groups till there was clarity on the issue. "I do not want this market to be a gambling place," he had said.

"We must clearly understand the legitimate role of speculation in futures market the legitimate speculators are a well regulated risk-taker, a risk transferor and then a transferee, without whom market cannot function. But, risk transferers can not transfer risk to themselves," he noted.

Khatua said that there was nothing to worry about a big corporate house owning an exchange "except that there should not be conflict of interest between its role as the owner and its other roles, if any."

It would be deemed as conflict of interest if an owner also has a broking house and it holds a direct position in the market and owns the exchange, he explained. Reliance and Kotak are the only two applications that FMC is currently holding for approval, Khatua said
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