New Delhi: 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 fulfil 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. In the first ever merger of two regulators, the over 60-year-old FMC was merged with the younger, but much bigger, capital markets watchdog Sebi to create a unified regulatory body.
The Securities and Exchange Board of India (Sebi) was set up in 1988 as a non-statutory body for regulating the securities markets, while it became an autonomous body in 1992 with fully-independent powers. FMC, on the other hand, has been regulating the commodities markets since 1953, but lack of powers has led to wild fluctuations and alleged irregularities remaining untamed in this market segment.
The commodities market has been known to be more prone to speculative activities compared to the better-regulated stock market, while illegal activities like ‘dabba trading’ have also been more frequent in this segment. Besides, the high-profile NSEL scam that rocked this market in the recent past, and the subsequent regulatory and government interventions in this case eventually led to the government announcing FMC’s merger with Sebi.