SEBI ISSUES TIMELINE FOR COMPLIANCE NORMS BY COMMODITY BOURSES

Capital markets regulator Securities and Exchange Board of India (“SEBI”) announced detailed timeline for compliance to various regulations by the commodities derivatives exchanges.

The move comes following the merger of commodity markets regulator Forward Markets Commission (“FMC”) with Sebi in late September.  To ensure non-disruptive transition, Sebi has prescribed specific timeline for aligning different provisions of the Stock Exchanges and Clearing Corporations (“SECC”) Regulations.

In a circular, SEBI clarified corporatisation and demutualisation of regional commodity derivatives exchanges would need to be done within three years.  In this regard, regional commodity exchanges will have to submit a scheme for SEBI's approval within a period of two years. For availing services of a clearing corporation also, Sebi has set a timeline of three years. Till then, clearing may continue with the current arrangement.

For net-worth, Sebi Clarified that national commodity bourses will have to achieve a minimum net-worth of 100 crore by May 5, 2017, while the same is three years for regional ones. The commodity exchanges will have to submit audited net-worth certificate from the statutory auditor on an yearly basis by September 30 every year for the preceding financial year, while net-worth certificate for the financial year ended March 31, will be submitted by December 31.

For shareholding, the deadline of May 5, 2019, would be applicable for national exchanges, while three-year time period has been given to regional exchanges. The governing board norms would need to be complied within one year from the date of merger for national exchanges and within three years for regional exchanges.

Commodity exchanges will have to segregate their regulatory departments from other departments within 6 months.  The national commodity exchanges will credit all settlement related penalties to their settlement guarantee fund (“SGF”) and other fines to Investor Protection Fund (“IPF”), while regional bourses will credit all fines to their SGF and after the creation of IPF, regional ones will credit penalties other than settlement related to their IPF.