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  Business   Sebi likely to clear more commodities for trading

Sebi likely to clear more commodities for trading

AGE CORRESPONDENT
Published : Oct 1, 2016, 12:57 am IST
Updated : Oct 1, 2016, 12:57 am IST

The Securities and Exchange Board of India (Sebi) on Friday said it would consider allowing more products in the commodity derivatives market once it is able to put in place a strong and robust risk m

The Securities and Exchange Board of India (Sebi) on Friday said it would consider allowing more products in the commodity derivatives market once it is able to put in place a strong and robust risk management and surveillance mechanism.

The regulator said that its primary focus is to strengthen the risk management and surveillance mechanisms to align it with the working of commodity derivatives market and bring it at par with the equity markets.

On asked whether the regulator would allow banned commodities to trade in the derivatives market, U.K. Sinha, chairman, Sebi said, “That cannot be immediately taken up. We could consider it at a later stage. Once we have a strong and robust risk management system and surveillance mechanism, I don’t think there would be a need for a banning any commodity. Once it is done, Sebi would be happy to allow new products in the commodity exchanges”.

The government had placed ban on several commodities in the derivative exchanges on allegations that the excessive speculation in futures trading was responsible for the sharp rise in the prices of essential commodities.While addressing the media on completing one-year post merger of forward market commission (FMC) with Sebi, Mr Sinha said the regulator would move cautiously in the development of the commodity derivatives market.

The merger happened in the background of the Rs 5,600 crore settlement crisis at the National Spot Exchange Ltd (NSEL).

After taking over the commodities futures market, the regulator carried out inspection at several godowns and warehouses.

“There were several shortcomings with regards to the quantity and quality of goods. We took several measures and brought a new set of regulations to raise the standard of warehouses,” Sebi chairman added.

However, Mr Sinha said that the existing price pooling mechanism in the spot market is a big cause of worry for the regulator as it is not scientific and is hampering the efficient price discovery process in the futures market.