Ready to regulate commodity trading, Mr Sinha has cautioned small investors against coming for quick gains through speculation in this market, saying this is “risky” and requires a lot of technical expertise.
Mr Jaitley, who formalised on Monday the merger of Forward Markets Commission (FMC) with Sebi by ringing the customary bell, said that the amalgamation will bring convergence of regulations in the commodities and equity derivatives markets.
He further said Sebi will “spare no efforts” to build a robust commodity markets and it will also try to make the Indian stakeholders in the commodity space as “price-makers” as against “price-takers”.
Even though the merger has been on the cards for 12 years, the move was expedited in the wake of the Rs 5,700-crore payment crisis at NSEL that affected many investors.
There were expectations that the merger would pave way for FPIs to participate in the commodities derivatives market, as they are already allowed by Sebi in the capital markets segment under its ambit. “We have to continue to change to evolve, to improve, to reform”, he said.
In April 2014, a panel headed by DS Kolamkar submitted a report to the government batting for opening up the commodity market to FIIs and banks. Most important: to keep it simple and not complicate things.
While commodities market has seen a tremendous growth in participation after liberalisation and the market participants and regulators should now brace to face the challenges thrown up by the global developments of ever growing exchanges and integration of markets, he added. Sinha’s passing remark today on the interbank rates during his speech has raised some eyebrows on whether the government has taken the first step towards making a super regulator a success.
The regulator has also updated its website to include a section on commodities market.
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.
This is the first major case of two regulators being merged, as against the relatively more frequent practice world-wide of creating new regulatory authorities, including by carving out new bodies from the existing entities.
Together, all the exchanges clocked a turnover of almost Rs 60 lakh crore in 2014-15, from over Rs 101 lakh crore in the previous fiscal.