Ahead of the hearing of PXIL's petition on electricity futures, the commodity market regulator, Forward Markets Commission (FMC), has said that the spot and futures trading of electricity can be controlled by two different regulators."The spot market and forward markets in goods (including electricity) can be regulated by two different regulators," Forward Markets Commission (FMC) Chairman B C Khatua said in a letter to the Central Electricity Regulatory Commission (CERC).
Citing the example of agricultural market, he said, "Spot trading in agricultural commodities is regulated by various states under the State Agricultural Produce Market Committee (APMC) Acts. Forward trading in agricultural commodities is, however, governed by Forward Contracts (Regulation) Act (FCRA), 1952 in the whole country".
He further said that trading in agricultural commodities have been put in the State List vide seventh schedule of the country's Constitution, while forward trading in commodities is in the Union List.
As a result, forward trading in electricity comes under the purview of FCRA. "This does not take away the jurisdiction of the CERC in respect of spot trading in electricity," he said.
The dispute over the control of electricity futures arose when the NSE-NCDEX promoted Power Exchange of India Ltd (PXIL) filed a petition with the CERC questioning the authority of FMC in dealing with futures trading in electricity.
PXIL, which has kept FMC, Indian Energy Exchange (IEX) and its major promoter MCX as respondents, sought that the CERC should regulate the futures market of electricity. It requested CERC to restrain MCX from dealing in electricity futures.
It also pleaded that its competitor IEX should not be allowed to trade electricity futures as spot trading is still not fully developed.
Source - Economic times