Sebi faces 'complex challenges' in regulating commodity markets: Sinha

Regulator aims to bring commodity derivatives market at par with securities market

The Securities and Exchange Board of India (Sebi) faces “many complex challenges” in regulating the commodity markets, says chairman U K Sinha (pictured).

These challenges, according to Sinha, emanate from underlying markets, which are “fragmented, dispersed and not under its regulatory purview”.

Sinha made this comments in the ‘chairman’s statement’ in Sebi’s annual report for 2015-16. The commodity derivative market has come under Sebi’s purview since September 2015 after the merger of the erstwhile Forward Markets Commission with Sebi. Sebi’s aim is to bring the commodities derivatives market at par with securities market in all aspects.

“Post-merger, Sebi’s immediate priority was to ensure the orderly conduct of commodities derivatives market devoid of any disruptions,” Sinha said.

According to him, despite these challenges, Sebi has in the past six months been “endeavouring towards reshaping and refining commodities derivatives market regulations, strengthening its risk management framework, aligning existing market participants to a uniform regulatory framework, boosting the surveillance mechanisms at exchanges”.

Adding: “In the years to come, Sebi’s vision is to evolve the commodity market with new products and new categories of participants leading to better liquidity, thus facilitating fair price discovery for the benefit of stakeholders.”