Sebi working on better risk management for commexes

Writes to states to tackle dubba trading in commodities; plans to inspect warehouses for better delivery practice

After merger of Forward Market Commission (FMC) with Securities and Exchange Board of India (Sebi), the regulator is now risk management system of the market and is set implement the same soon.

"For the protection of investor, better risk management system is necessary for any market. We have already set up a task force for the same and an upgraded risk management will soon be implemented," Rajeev Agarwal, whole time member of Sebi told Business Standard.

According to Agarwal, commodity markets should be vibrant and to achieve that some areas required improvement which are being prioritized by Sebi. Currently the board is focusing on upgrading risk management, market surveillance and improvement of warehouse mechanism for delivery.

Agarwal also emphasised on better surveillance of commodity market and advised exchanges for which Sebi was planning including brokers in market surveillance system.

"Exchanges have to engage in active surveillance. It has to be improved and we are working for that. Exchanges have to work like market regulator for good governance. We are planning to include brokers in surveillance system," said Agarwal.

To create better delivery system, Sebi hopes for recovery of warehousing structure. The board is planning to conduct inspections to ensure delivery.

On it Agarwal said, "Warehousing mechanism needs to be improved and exchanges can play important role in it. We will conduct inspection to make sure delivery method."

Dabba trading is a big issue and to control it, Sebi has written letters to all the states governments and police officials to look closely on such activities. Sebi is also educating the police officials about market operations and related things so that it become easy to tackle the cases related to dabba trading.

Agarwal said, "We are ready to help government and police wherever required to curb dabba trading. We have already written to all states and ready to extend our assistance to control dabba trading. We are also educating police department about market functioning."