By Siddesh Mayenkar
MUMBAI (Reuters) - The Forward Markets Commission (FMC), India's commodity market regulator, plans to cut the number of contracts any member can hold in agricultural commodities in line with production estimates to curb excessive speculation, its head said on Monday, a week after banning guar futures trading.
"We have reports that production of some agricultural commodities have gone down or may go down this year. We are going to rationalise position limits (the number of contracts individual members can hold) accordingly," Ramesh Abhishek, chairman of the FMC, told Reuters.
On March 28, the regulator halted trading in guar seed and gum contracts -- a day after the food minister called for a probe into volatile prices -- in a move seen denting confidence for the country's nascent futures trade.
Industry bodies have asked the consumer affairs ministry for a probe into large scale manipulation in chana and oilseeds futures as well.
The National Commodity and Derivatives Exchange (NCDEX) has already imposed 10 percent special margins -- the deposit required on any contract -- on all sell, or long position, contracts for chana and rape mustard seed from March 31.
Abhishek said the regulator is also undertaking a "comprehensive" review of futures trade in all agricultural commodities to help them all align with the physical market.
"The review will be done now and we will be consulting with the exchanges as well as other stakeholders... We will try to do it as early as the next few weeks," he said.
The Indian federal government doesn't allow foreigners to trade in commodity futures, but foreign institutional investors have exposure to the market through stakes in the exchanges.
NYSE Euronext , Merrill Lynch Holdings and Fidelity International have about 5 percent each in the Multi Commodity Exchange , the country's biggest in terms of turnover.
(Editing by Jo Winterbottom)