Terming investor as 'the most important person in the securities market', Sebi Chairman U K Sinha today said efforts are under way to deepen the corporate bonds market and widen mutual funds penetration and strengthen the commodities market.
He, however, warned that activities and movements in the physical commodities market can influence and have significant repercussions on real economy and said, "Caution needs to be exercised while framing policies for commodity derivatives since these may influence the physical markets at different levels."
With firm and steady steps, Sebi will ensure that in coming years, commodities derivatives market is at par with securities market in all aspects - technology, new products and participants, risk management, regulations, supervision, surveillance, investor protection and enforcement, Sinha said in annual report's message.
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The Securities and Exchange Board of India (Sebi) began regulating commodity markets following the merger of Forward Markets Commission (FMC) with itself in September last year.
Post-merger, Sebi's immediate priority was to ensure the orderly conduct of commodities derivatives market devoid of any disruptions.
"Going forward, on this front, Sebi faces many complex challenges, emanating from the underlying markets which are fragmented and dispersed and not under its regulatory purview. The activities and movements in the physical markets influence and, at times, can have significant repercussions on the real economy," he said.
"Hence, caution needs to be exercised while framing policies for commodity derivatives since these may influence the physical markets at different levels."
Sinha further said "efforts are under way to deepen the corporate bonds market, widen the penetration of mutual funds across the country and strengthening the commodities market".
Sinha said Sebi in the past six months has been
continuously endeavoring towards reshaping and refining commodities derivatives market regulations, strengthening its risk management framework, aligning existing market participants to a uniform regulatory framework, boosting surveillance mechanisms to better monitor the markets and instil confidence among all stakeholders.
Recognising the problems faced by banks in ever-growing non-performing assets (NPAs), Sebi chief said the regulator assisted the Reserve Bank in formulating strategic restructuring of debt scheme whereby banks can acquire equity in lieu of debt.
On its part, Sebi liberalised its regulatory framework so as to facilitate successful implementation of the scheme.
To effectively regulate, market regulators and policymakers need to be proactive, keep themselves updated and upgraded, he suggested.
Over a period of time, Sebi has strengthened both its regulatory purview and internal capacity to ensure interests of investors are well protected, Sinha said.
With implementation of different regulations prescribed by Sebi, Sinha said access to information has increased, risk of defaults has gone down and the overall governance has become conducive for protection of investor interests and overall development of the securities market in India.
