Sharma to head panel on common clearing system for commodity exchanges

Finance Minister Arun Jaitley has appointed former Reserve Bank of India (RBI) executive director V K Sharma to head a committee to prepare a road map for a common clearing system for all commodity exchanges. The aim will be to reduce transaction cost of market participants and to strengthen the risk management system. The committee will report by August 31.

The committee will also comprise representatives from the Forward Markets Commission and the department of economic affairs and will have invitees from the Securities and Exchange Board of India and Clearing Corporation of India, among others. Ajay Shah, professor, National Institute of Public Finance and Policy, will also be a member.

Apart from examining the feasibility of setting up a common clearing corporation for all commodity exchanges, the panel will also review existing risk management system, setting up a common repository for keeping an electronic record of warehouse receipts and to examine the feasibility of warehouse goods to be delivered against the settlement of trade across exchanges.