Common KYC for commodities and securities from April

KYC once accepted in the capital market ,will also work for commodities market

As a part of the move to streamline and align various processes followed in the capital and commodities market, Know Your Client (KYC) is being made common for both from April.

Early this week, the commodities markets regulator, Forward Markets Commission (FMC), held a meeting with all stakeholders about the KYC process.

The Securities and Exchange Board of India (Sebi) has permitted five KYC registration agencies to do KYC for participants of securities market. FMC has decided that KYC accepted in the capital market will also be accepted for commodities market.

KNOWING THE CUSTOMER

• Sebi has permitted five KYC registration agencies to do KYC for participants of securities market
• Any move by Sebi changing KYC related provisions will also be made applicable in commodities
• The decision follows representations by exchange members saying there are several common participants and hence KYC, once done, should be acceptable in both the markets

A FMC official said, “From April 2015, common KYC will be made applicable as an option and from July it will be made mandatory for new KYC. By the year-end, existing participants in commodities shall also have to follow new common KYC requirements.” A note on this circular is expected to be issued soon.

Any move by Sebi changing KYC related provisions will also be made applicable in commodities, said the official.

The decision follows representations by exchange members saying there are several common participants and hence KYC, once done, should be acceptable in both the markets.

Commodities markets also involve deliveries and certain processes are different and hence KYC for commodities will be of two types. One will be the normal KYC as done in securities markets, which can be obtained by giving a PAN number. The other step will be at exchange level, which will be for commodities only.