REC Trading Off to a Slow Start

Further to our analysis of REC trading in April, The Hindu recently covered the same, and so did Business Standard, which mentioned that the REC price declined by 61.5% in just the second trade.
We agree with their comment of REC Trading needing a ‘booster’. However, we believe that booster will come in the form of more frequent compliance requirement – clearly, if the obligated entity has time till March 2012 to meet the compliance requirement, why bother spending the money now?
One approach that the regulators can take is a model similar to the Advance Tax requirements in Income tax. Under that, a company needs to pay taxes of upto 15% by Q1, 45% by Q2, 75% by Q3 and 100% by Q4. A similar requirement will go a long way in making the REC mechanism a real market!