A recent episode involving determination of fees by commodity exchanges has sparked off an intense debate on the role of a regulator in dealing with a duopoly situation. The regulator here is the Forward Markets Commission (FMC) and the players the two commodities exchanges, NCDEX and MCX. The trigger is a decision by the FMC to prevent NCDEX from dropping its prices.
Ajay Shah has a column in the Financial Express arguing against FMC’s decision and pointing to the merits of competition to consumers. But, V. Shunmugum has a retort, also in the Financial Express, to Ajay Shah’s claims. In any event, the Bombay High Court has rejected NCDEX’s petition against FMC’s ruling and hence the ball appears to be back in FMC’s court.
What is particularly interesting in this debate is a comparison of the roles of FMC (as the commodities market regulator) and SEBI (as the securities market regulator) in India.