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SEBI has given the members (brokers) of commodity markets three months to register themselves with it and abide by the prevailing law within one year from the date of government notification of the FMC-SEBI merger. The Government will notify the effective date of merger as September 28.
In a statement issued after the SEBI board meeting here on Monday, the capital market regulator said commodity market members could continue with their activity when their application is being considered, unless it is rejected.
For commodity members entering the sphere anew, the regulations will apply from day one, it said.
“Brokers shall comply with the requirements for registration as members of exchange, as specified in the Securities Contracts Regulation Rules, 1957, and SEBI (Stock Broker and Sub-Broker) Regulations, 1992.
“They shall also comply with the board constitution, number of directors, their experience and net worth within one year from the date of notification by the Central Government for the transfer and vesting of rights and assets of the FMC to SEBI,” it said.
Nod for draft amendment The SEBI board also approved draft amendments to the existing regulations following the government decision to repeal the Forward Contracts Regulation Act, 1952, under which commodity markets were functioning so far. The draft amendments will be notified on September 28.
The new regulations will enable functioning of the commodities derivatives market and its brokers under SEBI norms and integration of commodities derivatives and securities trading in an orderly manner, said SEBI.
The market regulator has asked the three national commodity exchanges — MCX, NCDEX and NMCE — to set up a separate clearing corporation by September 28, 2018. Till then, exchanges can continue with the current arrangement for clearing trades by ensuring guarantee for settlement of trades, including good delivery. A standalone clearing corporation calls for an investment of ₹300 crore to meet the minimum net worth criteria.
While the three exchanges need to have a net worth of ₹100 crore by May 5, 2017, the shareholding norms have to be complied by May 5, 2019.
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