According to an exchange official, “The merger of FMC with Sebi will also pave the way for allowing institutional players in commodity derivatives, which will impact the liquidity and depth in the market. Te challenge for Sebi would be to build expertise to regulate the commodity market, which is fundamentally different as deliveries in commodities are physical.”
The finance minister has announced a decision to merge the commodities market regulator, Forward Markets
Commission (FMC), with the capital markets
regulator, Securities and Exchange Board of India (Sebi). To give effect to this, amendments in the respective Acts governing these markets
have been introduced.
Once the Forward Contracts (Regulation) Act is repealed, as proposed, FMC will cease to exist. And, all national and regional commodity exchanges will come under the ambit of the stock markets regulator, Sebi. The guidelines issued by FMC will remain in force for a year or its merger with Sebi, whichever is earlier..
Read our full coverage on Union Budget
The Finance Bill also proposed the required amendments to the Securities Contracts (Regulation) Act, with commodity derivatives being redefined as securities and forward trading to come under Sebi.
Jayant Manglik, president-retail distribution, Religare Securities, said: “The effective merger will probably take several months, as it might have to be referred to a standing committee of Parliament. The move will also facilitate faster introduction of new products in commodities like options and indices trading.”
Soon after the minister announced the merger, the share price of the Multi Commodity Exchange, the only listed one in the segment, surged on the hope that the market would expand. MCX closed 13 per cent or Rs 137.45 higher at Rs 1,191.65 on the BSE. The combined traded volume in MCX on the BSE and the National Stock Exchange was 7.68 million shares.
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