Sebi clears stock, commodity bourses’ linkage
◗ Experts say that consolidation will reduce the know your customer burden on brokers and customers, broaden the markets and go a long way in developing the Indian financial markets
In a sweeping reform, market regulator Securities and Exchange Board of India ( Sebi) on Thursday approved convergence of stock and commodity bourse from October 2018. The move, among a slew of reforms aimed at creating easier access norms for domestic and foreign portfolio investors ( FPI), will allow bourses like the NSE and BSE to launch commodity products on their platforms.
According to market experts, the convergence will help an individual to have one account to trade in all asset classes.
Sebi chairman Ajay Tyagi told reporters that the integration process would involve removal of certain existing restrictions by amending the relevant securities market regulations with effect from October 1, 2018. “All exchanges will be able to do securities trades as well as commodities trade from October 1, 2018. As you are aware when FMC was merged with Sebi in September 2015 there were different timelines for different items. Going by these timelines we could see that October 2018 perhaps is the right time where it would be three years after Sebi- FMC merger that all exchanges are able to deal with commodities or securities. This has been approved by the board,” Mr Tyagi said.
In a sweeping reform, market regulator Sebi on Thursday approved convergence of stock and commodity bourse from October 2018. The move, among a slew of reforms aimed at creating easier access norms for domestic and foreign portfolio investors ( FPI), will allow bourses like the NSE and BSE to launch commodity products on their platforms.
According to market experts, the convergence will help an individual to have one account to trade in all asset classes.
Sebi chairman Ajay Tyagi told reporters that the integration process would involve removal of certain existing restrictions by amending the relevant securities market regulations with effect from October 1, 2018.
“All exchanges will be able to do securities trades as well as commodities trade from October 1, 2018. As you are aware when FMC was merged with Sebi in September 2015 there were different timelines for different items. Going by these timelines we could see that October 2018 perhaps is the right time where it would be three years after Sebi- FMC merger that all exchanges are able to deal with commodities or securities. This has been approved by the board,” Mr Tyagi said.
Amar Singh, head advisory, Angel Broking, said, “The move is expected to broaden the markets and this key reform will go a long way in developing the Indian financial markets in years to come.”
The Sebi board, which met in Mumbai, also decided to strengthen the regulations governing credit rating agencies ( CRA) and mutual funds by putting restrictions on crossholding among them.
The move is aimed at safeguarding investors' interest.
Besides, the Sebi allowed listing and trading of security receipts issued by ARCs ( Asset Reconstruction Companies) to enhance capital flows and help deal with bad loans in banking industry, even as it deferred a decision on making it mandatory for listed firms to immediately inform investors about any loan defaults.
Sebi also relaxed its regulations for real estate and infra investment trusts, besides providing more avenues for listed firms to meet minimum 25 per cent public shareholding.