New Products to Hit Commexes by H2 of FY17
But introducing new participants remains a complex issue
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.