Commodity derivatives exchanges will now have to disclose the quantum of trading done by farmers and other commodity market participants like millers and wholesalers on the exchange platform, as the capital market regulator has tweaked the disclosure norms for such bourses.
In a circular issued on Friday, the Securities and Exchange Board of India (SEBI) directed commodity bourses to disclose the open interest and turnover of various categories of participants like farmers, farmers producer organisations (FPOs), value chain participants, proprietary traders, foreign participants, and domestic financial institutional investors.
Value chain participants include processors, commercial users like dal and flour millers, importers, exporters, physical market traders, stockists, cash and carry participants, produces and wholesalers among others.
Currently, commodity derivatives exchanges disseminate turnover data for only two broad categories of participants — clients and proprietary.
Incidentally, the SEBI move assumes significance also because a large section of market players believe that the commodity market turnover is largely dominated by speculators and other participants that are not genuinely connected with the commodity segment.
Transparency important
“Transparency in the commodities derivatives markets is paramount for price signals as well as its correlation with the underlying physical market activities,” stated SEBI in the circular.
“To begin with, stock exchanges shall make the disclosures on a weekly basis for every Wednesday by next Wednesday by October 1, 2019. By April 1, 2020 onwards, such disclosures shall be made on daily basis by 6 p.m. on T+1 day,” SEBI said in the circular.
