Sebi initiates process to integrate commodity spot and derivatives markets

The issue needs much more deliberation as spot market price discovery is inefficient

After meeting Finance Minister Arun Jaitley on Saturday, the board of Sebi, regulator for the financial markets, including commodities, has decided to take forward the issue of integration of the commodity spot markets and the derivatives markets.

Jaitley had proposed this in the Union Budget on February 1. The move is significant as even for the futures market, a transparent price for the relevant commodity traded in the spot market is required.

Some to whom Business Standard spoke said there were several challenges for integrating spot and derivatives. The latter are standard contracts, with specified allowances in grades.