Commexes must comply with securities mkt standards: Sebi

Stating that regulating commodities derivatives market has several challenges, The Securities and Exchange Board of India (Sebi) on Wednesday said commodity exchanges and its stakeholders would have to match the standards set for securities market at faster pace.

Sebi also said it had to "beef up surveillance" in commodity derivatives segment to eliminate general perception that the commodities market is the "den of manipulation".

"We will have to match the standards set by Sebi in the securities market and definitely this will have to be achieved with fast speed and with the cooperation of all stakeholders," Sebi Regional Director Amit Pradhan said at an Assocham event.
 

Noting that the market watchdog is at the brink of new beginning in terms of institutional reform after the historic merger of FMC with itself, Pradhan said several steps have been put in place to ensure that the transition is smooth and commodities market scale to a new efficient level. "Sufficient time frame for compliances to all market participants has been given to ensure there is no derailment due to shifting from passenger train (Forward Markets Commission) to a bullet train (Sebi)," he said.

Forward Markets Commission (FMC) was merged with Sebi in September 2015.

Highlighting key measures, Pradhan said commodity brokers have been asked to align with Sebi stock broker regulations.

The markets regulator is guiding brokers to get registered with itself and has received 1,432 applications so far.

National commodity bourses have been asked to set up investor service centres, investor grievances redressal committee and arbitration committee by April 1, 2016.

Sebi has specified timelines to commodity bourses for compliance with various provisions of securities laws, and also prescribed mandatory requirement and exit policy for bourses, besides risk management framework, among others, he added.

With Sebi enhancing transparency and governance, Pradhan said commodity markets may be at par with the securities market in the coming years in terms of technology, regulatory compliances and product innovation.

On concerns related to decreasing turnover, rise in transaction cost and banning of some products, the official said Sebi is addressing these issues within three mandates - investor education and protection, regulation and development of the markets.

The industry has expressed concern over rise in illegal trading in commodities market in view of high transaction cost due to CTT and other taxes.