63% commex members unregistered

Development assumes significance as trade estimates a large number of inactive members to opt out of Sebi registration due to high fee

Around 63 per cent of commodity exchange members remain unregistered, four days ahead of the deadline for doing so, fixed by the Securities and Exchange Board of India (Sebi).

While merging the erstwhile commex regulator, the Forward Markets Commission (FMC), into itself from September 28, Sebi decided to give three months for such bourses' members to re-register with it. In a circular issued on Thursday, India's largest commex, Multi Commodity Exchange of India (MCX) warned members to send their registration application and membership fee to it by Monday. Failing which, their trading would have to be squared off. A similar circular was issued by the National Commodity and Derivatives Exchange (NCDEX).

The trade estimates a large number of inactive members would opt out of Sebi registration, due to the high fee. High transaction costs due to levy of the commodity transaction tax has also reduced the muscle power of small traders in offering incentives to clients, leading to the latter's shifting to larger  members.

“Around 50 per cent of members are inactive on exchange platforms. They are currently holding on to their membership because they are waiting for Sebi to further lower the fees. Also, they were waiting for Sebi to start new instruments, including options, on commexes. Such members might not seek Sebi registration,” said B K Sabharwal, national president, Commodities Participants Association of India, a body formed for protection of the interest of commodity derivatives traders.

Sebi had already lowered the membership fee from Rs 500,000 initially to Rs 100,000 now. Even this seems quite high for small members, especially in rural India. "But, it is highly unlikely that Sebi will lower the membership fee any more," said Sabharwal.

According to trade sources, 2,930 members were registered with FMC, of which half were inactive for long. Of the 1,700 members on MCX, around 750 remained active. The exchange had 626 applications for registrations until Thursday evening. NCDEX's membership was around 800, of which 450 are active. According trade sources, around 400 NCDEX members have sought registration so far.

Ahmedabad-based National Multi Commodity Exchange (NMCE) has 429 registered members, of which 140 are active. Only around 50 NMCE members have applied so far for Sebi registration.

"Sebi's registration deadline, however, would have hardly any impact on trade, as members would shift to become a client and continue to trade on comexes," said Anil Mishra, managing director, NMCE.

ON THE RED LINE

Status of commexes members

Exchanges Total Active Applied Unregistered (%age of total) MCX 1700 750 626 63 NCDEX 700 450 389 45 NMCE 429 140 50 88 Total 2829 1340 1068 63
Source : Trade, data upto Thursday evening, Figures are estiamted