SEBI To Seek Public View Before Allowing Unified Exchanges
SEBI is unlikely to allow unified commodity and stock exchanges soon.
The market regulator won’t rush in to allow unified commodity and stock exchanges. It will first release a consultation paper before moving in that direction, said SK Mohanty, executive director of the Securities and Exchange Board of India.
“The debate is under deliberation when it should be done,” Mohanty said.
The Forward Markets Commission, which regulated the commodity derivatives market, was merged with SEBI in 2015, allowing commodity bourses to become deemed stock exchanges. This prompted agents and brokers to urge the regulator to allow unified exchanges as stock and commodity derivatives are under its purview.
SEBI had indicated that it would require up to three years to move towards unified exchanges, that too in a gradual manner. Last week, it brought out regulations for integrated brokers, those having different licences for stock and commodity exchanges, allowing them to consolidate their operations under a unified licence.
Besides, the regulator is in advanced stages to make mutual funds and portfolio management services a part of the commodity market. SEBI will come out with a regulatory framework detailing the extent of their participation and other restrictions, said Mohanty.
For every new regulation, SEBI has made sure that they come out with a consultative paper and that is the right way, said Mrugank Paranjpe, managing director and chief executive officer of Multi Commodity Exchange Ltd., India’s largest in the segment. “It makes sure that every participant gets the chance to be heard, and then SEBI takes a balanced view.”
The Reserve Bank of India on Monday allowed banks and financial institutions to become trading and clearing members in commodity markets. So far, they were allowed only in the stock markets. RBI has not allowed these banks and institutions to take up proprietary positions or trade.
Bank subsidiaries or bank-promoted entities probably constitute about 30-35 percent of the market in the equities segment, said Paranjpe. Allowing them into the commodity market will lead to both an increase in trading volumes and distribution strength, he added.