Business Standard

Commodities, securities norms to converge

Commexes allowed to have different transaction charges for commodities

Rajesh Bhayani  |  Mumbai 

With the derivatives regulator, Forward Markets Commission (FMC), now under the finance ministry, rules governing the commodities markets are being converged with the derivatives’, wherever there are similarities.

One is to disallow commodity exchanges from having different transaction charges for different brokers. In securities, irrespective of volumes, the charges are similar for all brokers. However, the has allowed exchanges to have different transaction charges for deliverable commodities.

An official said, “We have allowed freedom to exchanges to have different charges for commodities where they have to establish different mechanisms and set up infrastructure for delivery.”

In the case of agricultural commodities, more deliveries take place. However, in base metals and energy, cash settlements take place. Hence, charges can be lowered.

Some exchanges have requested the FMC for this. But the Multi Commodity Exchange, where most volumes come from metals and energy, stands to lose.

“The move is to ensure a level-playing among exchanges,” said the official.

The FMC had said it may allow shareholders of exchanges with less than two per cent shareholding to trade on those. However, now it is considering allowing all shareholders to trade on the same exchange, given the shareholder is not on its board.

The FMC, said the source, is considering widening position limits for participants. This could improve hedging and bring higher volumes. The risk management group set up by the FMC had recommended this.

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Commodities, securities norms to converge

Commexes allowed to have different transaction charges for commodities

Commexes allowed to have different transaction charges for commodities
With the derivatives regulator, Forward Markets Commission (FMC), now under the finance ministry, rules governing the commodities markets are being converged with the derivatives’, wherever there are similarities.

One is to disallow commodity exchanges from having different transaction charges for different brokers. In securities, irrespective of volumes, the charges are similar for all brokers. However, the has allowed exchanges to have different transaction charges for deliverable commodities.

An official said, “We have allowed freedom to exchanges to have different charges for commodities where they have to establish different mechanisms and set up infrastructure for delivery.”

In the case of agricultural commodities, more deliveries take place. However, in base metals and energy, cash settlements take place. Hence, charges can be lowered.

Some exchanges have requested the FMC for this. But the Multi Commodity Exchange, where most volumes come from metals and energy, stands to lose.

“The move is to ensure a level-playing among exchanges,” said the official.

The FMC had said it may allow shareholders of exchanges with less than two per cent shareholding to trade on those. However, now it is considering allowing all shareholders to trade on the same exchange, given the shareholder is not on its board.

The FMC, said the source, is considering widening position limits for participants. This could improve hedging and bring higher volumes. The risk management group set up by the FMC had recommended this.
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