As the first anniversary of the Forward Markets Commission (FMC)’s merger with the Securities and Exchange Board of India (Sebi) nears, Sebi has aligned all trading norms applicable to equity until now to commodity derivatives markets.
FMC was merged with Sebi on September 27, 2015. But, trading norms set for the commodity futures market by FMC were to remain effective for one year or until the same were revised by Sebi.
Since a year’s period of the effectiveness of commodities norms is completing on September 26, Sebi has made norms applicable for the securities markets to commodities futures as well. In this process, a Sebi circular dated September 23 said members of commodities’ derivatives markets need to segregate funds owned by their clients with own funds. They also need to segregate securities with commodities. Sebi clarified that the FMC had not issued any circular in this regard. “Large brokers were doing such segregation. Hence, the new norms would be applicable to a handful of small brokers who were not doing such segregation earlier. But, Sebi’s move to align commodities derivatives markets to equity markets is a good move,” said a senior official with a large broking firm.
Until now, commodity brokers were informing clients about their account positions including holding of traded commodities along with other details. But, the Sebi circular makes it mandatory to create an exclusive e-mail identity for redressal of investor complaints according to the existing practice in equity markets.
Apart from that, Sebi has directed brokers to display vital information such as logo, registration number, contract note, and investor grievance redressal mechanism on their notice board.
The broking firm official said that the guideline on outsourcing of activities by intermediaries as directed by Sebi was unclear as to what services a commodity broker could outsource.
The regulator has directed brokers to send statements of accounts to their clients in the physical form on a monthly basis.