A committee nominated by the Securities and Exchange Board of India (Sebi) has recommended allowing stock brokers to participate in the commodities markets, and letting stock exchanges share their surplus infrastructure with commodity exchanges or, alternatively, set up subsidiaries to function as commodity exchanges.
The KR Ramamoorthy Committee has also suggested amendments to the Securities Contract (Regulations) Rules to give effect to these proposals.
The recommendations are important because India is now set to fully integrate its market system. With futures trading in 81 commodities allowed last year and derivatives trading in electricity, freight and commodity indices likely to be permitted soon, this latest permission is expected to provide a larger universe of derivatives to stock brokers.
By some estimates, India's commodity futures market has the potential to surpass the stock market