Commexes asked to implement FSLRC's suggestion from next month

Suggestions aim to strengthen consumer protection in financial markets

Commodity markets regulator FMC has directed all exchanges to implement the suggestions of the Financial Sector Legislative Reforms Commission that aim to strengthen consumer protection -- from May 1 in case of new members, and from December 31 for the existing ones.

FSLRC had proposed amendment of the Annexure 3 of Know Your Customer (KYC) document "Rights and obligations of members, authorised persons and clients" to strengthen consumer protection in financial markets including commodity exchanges.

"Since no comments had been received from the public, and the national exchanges' comments were broadly supportive of the amendments, the Commission has directed the exchanges to adopt the said amendments," Forward Markets Commission said in its latest report.

The exchanges should amend the KYC document effective from May 1 for new members and December 31 for all existing members, it said.

The key amendments proposed to KYC document include the "requirement of professional diligence" on the part of members (brokerage firms) while entering into a financial contract and "protection from unfair terms in financial contracts".

The other changes included protection of personal information and confidentiality relating to clients and not disclose it to a third party, fair disclosure and requirement for each member to have an effective grievance redress mechanism which is accessible to all its clients.

Currently, FMC regulates 6 national and 11 regional commodity bourses. The combined turnover of these commodity exchanges fell by 41 per cent to Rs 101.44 lakh crore in the 2013-14 fiscal, from Rs 170.46 lakh crore in 2012-13.