 "A man looks at a screen across a road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai")
The Securities and Exchange Board of India (Sebi) is yet to grant approval to the BSE to start a commodities platform, though Asia’s oldest bourse had approached it for a nod almost a year ago.
Some brokers had recently written to Sebi expressing their concerns and asked for clarity on the time frame for a nod. Sources said in the past year, the exchange had got just one communique from the regulator regarding the platform and that said the approval would take time.
“A few brokers have written to Sebi asking it to specify a period by when the approval for the platform could be given. Brokers would need at least six months to set up their commodity desks and put the necessary software/hardware in place,” said a broker, on condition of anonymity.
The broker said while the majority of BSE brokers would also be members of commodity exchange MCX, the platform would be a boon for 100-150 brokers who are active on the BSE but do not run commodity desks. “There will be synergies of operations as brokers will be able to use the same trading terminal to do commodities transactions without the need to separately register clients for trading in the segment,” the person said.
The platform could benefit several brokers. In May this year, Sebi Chairman U K Sinha had reportedly said stock exchanges would have to wait for some more time to start their commodity platforms. He had said the approval for the platform could take a few months as the regulator wanted to ensure that a robust risk management framework in the commodities space was in place first.
An e-mail sent to Sebi did not get any response. BSE declined to comment.
The proposal to start a commodities platform was approved by the BSE board of directors on October 20, 2014. The exchange had wanted to set up its own commodity exchange and had subsequently received Sebi’s nod for the same. However, it gave up the idea of setting up a separate bourse following news of Sebi’s merger with the Forward Markets Commission, the erstwhile regulator of the commodity derivatives market.
The National Stock Exchange of India (NSE) is already in the commodities space, through its 15 per cent stake in the National Commodity & Derivatives Exchange. It is also exploring setting up a commodities platform on its own exchange and had written to the regulator about four months ago. “Sometime back, we wrote to Sebi about our interest in commodities. We can only comment further once the regulator comes out with a framework and guidelines to accommodate stock exchanges,” said a National Stock Exchange spokesperson, in an e-mailed response.
STILL IN WAIT
- Brokers recently wrote to Sebi asking for clarity on the timeframe for the platform
- The platform would be a boon for 100-150 brokers who are active on the BSE but do not run commodity desks
- Brokers may need at least six months to set up their commodity desks
- The regulator has said a robust risk management framework for commodity trading is needed before its nod
- NSE also exploring setting up a platform for commodities. It wrote to the regulator four months ago regarding the same
