Date:09/03/2007 URL: http://www.thehindubusinessline.com/2007/03/09/stories/2007030903631200.htm

Back Tyre makers urged to participate in rubber futures

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FMC PLEA

Ahmedabad March 8 The Forward Markets Commission (FMC) has urged the representatives of Automotive Tyre Manufacturers Association (ATMA) and rubber dealers to encourage larger participation in the rubber futures market, so that the process of price discovery can be made more efficient and they can insulate themselves from the risk of price volatility.

The Commission has also advised representatives of ATMA and rubber dealers to use the stocks of rubber available with them to create credibility through compulsory delivery of the commodity to prevent any possible manipulation of prices by the persons working in consort, if any, according to the National Multi-Commodity Exchange of India (NMCE) here.

This facility of compulsory delivery of the commodity is provided by the Ahmedabad-based NMCE in its rubber futures contracts through negotiable and transferable warehouse receipts of the Central Warehousing Corporation (CWC).

In a release, it said the NMCE's aim is to increase wider active participation particularly of commercial participants. Commercial participants and consumers of rubber, including tyre manufacturers, can use this market both for covering their price risk (hedging) against their inventories as sellers, and for covering their regular purchases through futures markets as buyers.

There is no bar on bulk consumers such as tyre manufacturers on taking speculative positions within the limits on open positions as prescribed by the Commission. Rubber is one the most actively traded commodities on NMCE.