FMC Full Form & Meaning (Forward Markets Commission)

If you are involved in the trading of commodities, then you may have heard of FMC or Forward Markets Commission. It is an Indian regulatory body that oversees the functioning of forward and futures contracts on commodities. In this article, we will discuss the meaning and significance of FMC and FMC full form.

What is FMC Full Form

FMC stands for Forward Markets Commission. It is a regulatory body in India that regulates the commodity futures market. FMC has been established under the Forward Contracts (Regulation) Act, 1952. Its primary responsibility is to ensure the proper functioning of the forward and futures contracts on commodities.

History of FMC

FMC was established in 1953 as an independent regulatory body to oversee the functioning of the commodity futures market in India.

At that time, the commodity futures market was in its nascent stage, and there was a need for a regulatory body to ensure the proper functioning of the market.

FMC was entrusted with the responsibility of regulating the commodity futures market and to protect the interests of the stakeholders.

Functions of FMC

FMC has been entrusted with the following functions:

  1. Regulating and overseeing the functioning of the commodity futures market in India
  2. Ensuring fair trade practices in the commodity futures market
  3. Protecting the interests of the stakeholders
  4. Ensuring the proper functioning of the clearing houses
  5. Registering and regulating the participants in the commodity futures market
  6. Promoting research and development in the commodity futures market
  7. Resolving disputes in the commodity futures market

FMC vs. SEBI

The Securities and Exchange Board of India (SEBI) is another regulatory body in India that regulates the securities market. FMC and SEBI have different roles and responsibilities.

While FMC regulates the commodity futures market, SEBI regulates the securities market. However, in 2015, the FMC was merged with SEBI to create a unified regulatory body for the securities and commodity futures market.

Importance of FMC

The commodity futures market is an important market in India. It provides a platform for the farmers, producers, traders, and other stakeholders to hedge their risks against the price volatility of the commodities.

FMC ensures that the market functions in a transparent and fair manner, and the interests of all stakeholders are protected.

Benefits of FMC

The benefits of FMC are:

  1. Provides a platform for the farmers, producers, traders, and other stakeholders to hedge their risks against the price volatility of the commodities
  2. Ensures fair trade practices in the commodity futures market
  3. Protects the interests of the stakeholders
  4. Promotes research and development in the commodity futures market

Challenges faced by FMC

The challenges faced by FMC are:

  1. Lack of liquidity in the commodity futures market
  2. Lack of awareness among the farmers and producers about the commodity futures market
  3. Price manipulation by some traders and speculators
  4. Lack of infrastructure in some parts of the country

Reforms suggested for FMC

The reforms suggested for FMC are:

  1. Increasing the liquidity in the commodity futures market
  2. Educating the farmers and producers about the commodity futures market
  3. Strict action against the traders and speculators who indulge in price manipulation
  4. Creating infrastructure in the remote areas of the country to facilitate the participation of farmers and producers in the commodity futures market.

Future of FMC

After the merger of FMC with SEBI in 2015, the functions of FMC have been integrated into SEBI. The commodity futures market is now regulated by SEBI. However, FMC’s legacy continues to influence the functioning of the commodity futures market in India.

The future of the commodity futures market in India looks promising with the government’s focus on agriculture and the increasing participation of farmers and producers in the commodity futures market.

Conclusion

FMC played a crucial role in regulating the commodity futures market in India. It ensured fair trade practices, protected the interests of the stakeholders, and promoted research and development in the commodity futures market.

However, after the merger with SEBI in 2015, the functions of FMC have been integrated into SEBI. The future of the commodity futures market in India looks promising with the government’s focus on agriculture and the increasing participation of farmers and producers in the commodity futures market.

FAQs on FMC Full Form

  1. What is the role of FMC in the commodity futures market in India?

FMC was established to regulate the commodity futures market in India. Its primary responsibility was to ensure the proper functioning of the forward and futures contracts on commodities, protect the interests of the stakeholders, and promote research and development in the commodity futures market.

  1. What are the benefits of FMC?

The benefits of FMC are providing a platform for farmers, producers, traders, and other stakeholders to hedge their risks against the price volatility of commodities, ensuring fair trade practices in the commodity futures market, protecting the interests of the stakeholders, and promoting research and development in the commodity futures market.

  1. What challenges did FMC face?

FMC faced challenges like lack of liquidity in the commodity futures market, lack of awareness among the farmers and producers about the commodity futures market, price manipulation by some traders and speculators, and lack of infrastructure in some parts of the country.

  1. What reforms were suggested for FMC?

The reforms suggested for FMC were increasing liquidity in the commodity futures market, educating the farmers and producers about the commodity futures market, strict action against the traders and speculators who indulge in price manipulation, and creating infrastructure in remote areas of the country to facilitate the participation of farmers and producers in the commodity futures market.

  1. What is the future of the commodity futures market in India?

The future of the commodity futures market in India looks promising with the government’s focus on agriculture and the increasing participation of farmers and producers in the commodity futures market. However, after the merger with SEBI in 2015, the functions of FMC have been integrated into SEBI.

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