New Prod­ucts to Hit Com­mexes by H2 of FY17

But in­tro­duc­ing new par­tic­i­pants re­mains a com­plex is­sue

The Economic Times - - Commodities Plus - Ram.Sah­gal@ times­group.com

Mum­bai: New prod­ucts like op­tions or indices or an ex­panded list of fu­tures for the com­mod­ity de­riv­a­tives mar­ket could see the light of day in the sec­ond-half of the fis­cal year (FY17) af­ter the sub­group of the Com­mod­ity De­riv­a­tives & Ad­vi­sory Com­mit­tee (CDAC) on new prod­ucts and par­tic­i­pants sub­mits com­pre­hen­sive rec­om­men­da­tions to Sebi by Juneend. “The first meet­ing of the first sub­group will pro­vide com­pre­hen­sive rec­om­men­da­tions on new prod­ucts and par­tic­i­pants to Sebi by June-end,” said a per­son aware of the devel­op­ment. “Al­low­ing new par­tic­i­pants like banks is a com­plex is­sue and one doesn’t know whether that would fruc­tify soon but new prod­ucts are some­thing which can be launched in the sec­ond half of the cur­rent fis­cal year it­self. It could hap­pen be­fore the Union Bud­get for next year, that is be­fore or by Fe­bru­ary 2017.”

A Sebi of­fi­cial said it would be “pre­lim­i­nary” to dis­cuss de­tails as meet­ings of the sub­groups were “on­go­ing.” The 22-mem­ber CDAC was formed by Sebi af­ter the merger of the erst­while com- mod­ity de­riv­a­tives reg­u­la­tor For­ward Mar­kets Com­mis­sion (FMC) with it­self on Septem­ber 28 last year. It is chaired by Niti Aayog mem­ber Ramesh Chand and in­cludes com­mod­ity ex­change MD & CEOs, bro­kers, among oth­ers. It formed three sub­groups –– one for new prod­ucts and par­tic­i­pants, the sec­ond one on spot polling and the third on po­si­tion lim­its.

The first sub­group meet­ing was held on Mon­day. Bro­kers are keenly await­ing re­forms in the 13-year- old com­mod­ity fu­tures mar­ket. Cur­rently, only fu­tures trad­ing in met­als, energy and farm prod­ucts is al­lowed. Though six na­tional-level bourses ex­ist, only two proved their met­tle –– listed met­als and energy bourse MCX and farm fu­tures bourse NCDEX –– which to­gether ac­count for over 90% of mar­ket turnover.

Par­tic­i­pants are lim­ited to small­time pro­duc­ers and pro­ces­sors, re­tail spec­u­la­tors and a few large cor­po­rate hedgers. Op­tions, indices, new prod­ucts and new par­tic­i­pants would deepen the mar­ket and scale up turnover to com­pete with the much deeper se­cu­ri­ties de­riv­a­tives mar­ket. MCX and NCDEX to­gether posted av­er­age daily turnover of .₹ 25,889 crore in FY16 (Apr-Mar). In com­par­i­son, NSE’s F&O seg­ment tot­ted ADT of .₹ 2.62 lakh crore in FY16. There are 130 no­ti­fied prod­ucts for fu­tures trad­ing and all ex­changes to­gether have touched just 35, the per­son quoted ear­lier said.

ANIMISHA

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