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Even as the Securities and Exchange Board of India (Sebi) is set to become the new regulatory body for regional commodity exchanges by September-end, all the functioning and non-functioning exchanges are preparing to come under Sebi’s purview.
At present, the regional exchanges are being regulated by the Forward Markets Commission (FMC), which will later merge with Sebi. The regional exchanges have started going online and also undergoing demutualisation process.
While Uttar Pradesh-based Hapur Commodity Exchange has already begun demutualisation process, Kerala-based First Commodity Exchange of India Limited (FCEI) is also considering to call an extra-ordinary general meeting (EoGM) with members next month for the same. On the other hand, Gujarat-based Rajkot Commodity Exchange (RCX) is also planning to start functioning online soon.
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The regional exchanges used to trade in a traditional method called 'ring method' wherein sellers would loudly offer their stocks in an open space and buyers would raise their demand for the required quantity they want to buy.
Regional exchanges have been frequently meeting Sebi officials to understand new regulations and as well communicate issues they are facing. Similarly, Sebi officials are also trying to understand nature of work of regional exchanges.
"Our board has approved demutualisation. The Hapur exchange will be a public limited company in the next three months," said Rohit Garg, chairman of Hapur Chamber of Commerce (Hapur Commodity Exchange), known for mustard seed contracts.
The Hapur exchange board met in the last week of July followed by a meeting with Sebi on July 30. FCEI, which is known for coconut oil contracts, had not been functioning since last one after the FMC disallowed it from starting new contracts in June 2013.
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Shomy George, chairman of FCEI, said, “We are considering to call a EoGM by this month-end or in September to talk with members about demutualisation and other issues. We are also planning to apply for starting new contracts in our exchange once FMC merges with Sebi.”
FCEI has nearly 100 members. Before June 2013, the exchange used to achieve a daily turnover of about Rs 3 crore.
Few days ago, a team of Sebi had visited RCX. Later, regional exchanges too met with Sebi.
"The Rajkot exchange, however, is not considering to form a public limited company but we will surely start process to go online. It will take some time, as the concept is not clear to us," said Raju Pobaru, president of the exchange. The exchange achieves an average daily turnover of about Rs 35 crore and has around 110 registered trading members.
