Mumbai: The Forward Markets Commission (FMC) has commenced taking stern action against dabba trading, a top government official said.

"We are taking steps to curb dabba trading. We have already taken action against a regional exchange," FMC's Chairman B C Khatua told reporters on the sidelines of a conference here. He, however, did not name the exchange.

"It (the exchange) was not directly involved. But it was not taking action against those indulging in this practice," Khatua said, adding, "our action against illegal trading is showing results."

Dabba trading is a process used by brokers to route their clients trades outside the stock exchange. The brokers match and execute orders on their own and this saves transaction costs for both the brokers and clients.

Asked on the volumes involved in dabba trading, he said that this was like estimating black money in the system and hence, could not be estimated correctly.

"Higher the tax rate, higher the chances of evasion. Similarly, harsher the action taken, higher the tendency to escape the law," Khatua said.

Dabaa trading has largely been curbed in many places but new kinds of such practices have started, he said.

Since people started taking to official trading terminals, some of them are not declaring the full-trading details to exchange platforms, Khatua said.

"This means that they start behaving as sub-exchanges for certain transactions," he said.
Source : PTI