Press Trust of India
New Delhi, Oct 21: With commodities derivatives regulation under its fold, Sebi has notified 12 commodity bourses and associations as stock exchanges and has also created seven departments for effectively regulating this market. The move follows merger of the Forward Market Commission (FMC) with Securities and Exchange Board of India (Sebi) with effect from September 28. In a statement, Sebi said that 12 associations have been deemed to be recognised as stock exchanges.
These bourses are Ace Derivatives and Commodity Exchange, Bombay Commodity Exchange, Multi Commodity Exchange of India, National Commodity and Derivatives Exchange, National Multi Commodity Exchange of India, Rajkot Commodity Exchange, Chamber Of Commerce and Spices and Oilseeds Exchange.
In addition, Universal Commodity Exchange, Cotton Association of India, India Pepper and Spice Trade Association and Indian Commodity Exchange have also become stock exchanges.
To fulfill this additional responsibility of regulating the commodity derivatives market, Sebi has created additional seven departments like legal affairs, surveillance investigations and enforcement divisions. Also, it has created departments for commodity derivatives market regulation, market intermediaries regulation and supervision and economic policy and analysis.
Meanwhile, Sebi also issued a comprehensive risk management framework for regional commodity derivatives exchanges, including deposits required for members and margins need to be levied. The circular will be implemented by April 1, 2016, the Securities and Exchange Board of India (Sebi) said. The exchanges will levy minimum ordinary margins of four per cent on the open outstanding positions. Also, they can charge appropriate delivery period margins, additional margins among others based on their evaluation. Sebi said that bourses have the right to impose additional risk containment measures over and above the risk containment system mandated by it.
“All applicable margins shall be collected by exchanges before start of trading on the next trading day. If the member’s collateral is insufficient to cover the required margin and deposit requirements, member shall not be allowed by exchanges to further increase his open positions,” Sebi said.
