The Securities and Exchange Board of India (SEBI) will soon form an advisory committee for the commodity derivatives segment, which has come under its regulatory purview since September 28. This would be first such SEBI-appointed committee for commodities.
The capital market regulator has asked for commodity exchanges and market participants to suggest names of persons who could be included in the committee to advise the market regulator on broad policies for the commodity derivatives market.
This is in line with SEBI’s policy of creating an advisory committee comprising industry experts, market participants and academicians with a proven track record in a specific segment.
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Currently, there are advisory committees for various segments of the capital market, like the primary and secondary markets, mutual funds, corporate bonds, consent orders and takeover regulations.
An official involved in the committee’s formation, who declined to be named as discussions are yet to be made public, said, “Unlike earlier committees formed by the Forward Markets Commission (FMC), SEBI wants representations from all stakeholders. A committee member need not be directly involved in the commodity market as such, but could be one who is impacted by commodity prices.”
The committee is expected to have members representing stakeholders like farmers, banks, economists, academicians and even companies like ITC or HUL that have a huge commodity exposure.
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It is expected to comprise 10 to 15 members. The erstwhile commodity markets regulator, FMC, had formed similar committees but representation was mostly from traders and market participants. FMC was officially merged with SEBI on September 28 this year.
The official added that SEBI has taken a holistic approach in forming the committee and also regulating the commodity market. “Senior officials of the commodity exchanges and SEBI meet every Wednesday to discuss issues including price rise and surveillance measures,” he said.
Soon after formally taking over regulatory functions for commodity markets, SEBI swung into action by laying down fresh guidelines for market participants like commodity exchanges and brokers.
These were essentially in line with existing ones for equity market participants.
The commodity market in India is dominated by two exchanges – the Multi Commodity Exchange of India Ltd (MCX) and the National Commodity and Derivatives Exchange Ltd (NCDEX).
While MCX has the lion’s share in non-agricultural commodities trading, NCDEX dominates in agricultural commodities.
There are a few regional commodity bourses as well that trade in region-specific commodities.