Sebi approves commodities mkt norms; to merge FMC from Sept 28

Setting September 28 as the date for merger of Forward Markets Commission (FMC) with itself, Sebi today announced new norms for commodities derivatives market under which exchanges and brokers in this segment will need to comply with rules applicable to their stock market peers.
The new regulations will also come into force on September 28, the date from which Sebi would begin regulating the commodity derivatives market as a unified regulator.
These norms, approved by Sebi's board here today, will enable functioning of the commodities derivatives market and its brokers under Sebi norms and integration of commodities derivatives and securities trading in an orderly manner.

Sebi said the new regulations provide for compliance of Securities Contracts Regulation (Stock Exchanges and Clearing Corporations) Regulations, 2012, which are currently required to be complied with by stock exchanges.
The major compliances include norms related to net worth, shareholding norms, composition of board, corporatisation and demutualisation and setting up of various committees, turnover, infrastructure etc.
To ensure non-disruptive transition, Sebi has prescribed specific timelines for aligning different provisions of the SECC Regulations.

The corporatisation and demutualisation of regional commodity derivatives exchanges would need to be done within three years from the date of FMC's merger with Sebi.
For availing services of a clearing corporation also, Sebi has set a timeline of three years. Till then, clearing may continue with the current arrangement.

However, the commodity exchanges would need to ensure guarantee for the settlement of trades.
For net-worth, the timeline would be as provided by FMC, that is May 5, 2017, for national commodity derivatives exchanges and within 3 years from the date of merger for regional ones.
For shareholding, the FMC deadline of May 5, 2019, would be applicable for national exchanges, while three-year time period has been given to regional exchanges.
The governing board norms would need to be complied within one year from the date of merger for national exchanges and within three years for regional exchanges.
"The proposed norms also emphasize on strengthening of risk management of the exchanges. Further, investor protection norms similar to the equity markets would be provided by strengthening the arbitration mechanism and investor grievance redressal mechanism," Sebi said.

The existing members of these exchanges would be required to make an application for registration with Sebi within three months from the date of notification on September 28.
They will be allowed to continue their activity unless their application is rejected by Sebi.
For new members, the new regulations will apply from the beginning.