Forward Markets Commission to merge with SEBI today

In the first ever merger of two regulators, over 60-year-old FMC (Forward Markets Commission) will merge on Monday with the younger but much bigger capital markets watchdog the Securities and Exchange Board of India (SEBI) to create a unified regulatory body.

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 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 has 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.

Taking forward the announcement made by Finance Minister Arun Jaitley in his budget speech earlier this year, FMC would be merged with SEBI with effect from Monday.

The merger would be consummated here on Monday at a function attended by Mr. Jaitley himself, along with SEBI Chairman U.K. Sinha and other top officials from the government and the regulatory bodies.

This is the first major case of two regulators being merged, against the relatively more frequent practice world wide of creating new regulatory authorities, including by carving out new bodies from the existing entities.

FMC’s merger with the market regulator was aimed at streamlining the regulations and curb wild speculations in commodities market, while facilitating further growth of the market.

At present, there are three national and six regional bourses for commodity futures in the country. — PTI

This is the first major case of two regulators being merged