You are here: Home » Markets » Commodities » Other Commodities
Business Standard

Local commexes head online, start demutualising

At present, the regional exchanges are being regulated by the FMC, which will later merge with Sebi

Vimukt Dave  |  Ahmedabad 

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 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.

ALSO READ: Investors in limbo as regional exchanges shut down

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.

ALSO READ: Regional exchanges seek lower member registration fees

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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, August 03 2015. 22:33 IST