Capital markets regulator Securities and Exchange Board of India (Sebi) on Wednesday announced the formation of seven departments for regulating the commodities derivatives market. The notification follows the merger of Forward Markets Commission (FMC) with Sebi on September 28.
Sebi has created departments like legal affairs, surveillance investigations and enforcement divisions.
Also, it has created departments for commodity derivatives market regulation, market intermediaries regulation and supervision and economic policy and analysis.
Sebi also notified 12 commodity bourses and associations and they have been deemed as stock exchanges. These bourses are Ace Derivatives and Commodity Exchange, Bombay Commodity Exchange, Multi Commodity Exchange of India, National Commodity and Derivatives Exchange, National Multi Commodity Exchange of India, Rajkot Commodity Exchange, Chamber Of Commerce and Spices and Oilseeds Exchange.
In addition, Universal Commodity Exchange, Cotton Association of India, India Pepper and Spice Trade Association and Indian Commodity Exchange have also become stock exchanges.
In the first ever merger of two regulators, over 60-year-old commodities regulatory body FMC last month merged with the capital markets watchdog Sebi. The high-profile NSEL scam of July 2013 and the subsequent regulatory and government interventions led to the government announcing FMC’s merger with Sebi.
Sebi has received a time-frame of up to one year to adjust to the new regulations as they would have to follow the same norms that are applicable to their peers in the equity segment, while market participants will get up to three years to conform to stricter regulations mandated for securities trading.
Sebi is also working on a new mechanism for new entities which want to do business in both securities and commodity markets, and also focus to ensure high quality physical delivery for the combined regulatory authority.
The unified regulator also aims to allow trading in commodities index futures and options to help the industry with wide variety of products and better price convergence, Sebi Chairman, UK Sinha had said at an event marking the merger of the two regulators.
Commodity futures in India have been a politically sensitive issue. Despite a report by a government panel that showed no link between futures trading and wider swings in spot prices of food items, policy makers briefly suspended trading in soybean oil, potato, rubber and chickpea futures in 2008 after leftist parties blamed speculation by traders for rising inflation.
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