Mumbai: In a major step towards a simpler securities market trading infrastructure, regulator Sebi on Thursday announced much-awaited integration of stocks and commodities trading on a single exchange from October next year.
A two-phase integration of trading in commodity derivatives market with other segments of securities market at the exchange level was discussed and approved by Sebi's board at a meeting here on Thursday, a move that would help leading stock exchanges, BSE and NSE, to launch their commodity trading platforms.
Currently, commodity derivatives are traded on separate exchanges, which include MCX and NCDEX.
After the meeting, Sebi's Chairman Ajay Tyagi told reporters that the integration process would involve removal of certain existing restrictions by amending the relevant securities market regulations with effect from October 1, 2018.
This would pave way for all exchanges -- currently providing trading platforms for stocks and commodity exchanges – to provide universal trading facilities. This would allow all exchanges to do stocks as well as commodities trade from October 2018, Tyagi said. Sebi has already been regulating the commodities derivative market after the merger of erstwhile FMC (Forward Markets Commission) with it. In his budget for 2017-208, Finance Minister Arun Jaitley had proposed that the commodities and securities derivative markets would be integrated further by integrating the participants, brokers and operational frameworks.
For smoother implementation of this budget announcement, Sebi had decided that the integration would be done in two phases. The first phase involves integration at the intermediary level, while the second phase deals with enabling a single exchange to operate various segments such as equity, equity derivatives, commodity derivatives, currency derivatives, interest rate futures and debt instruments, among others.
Sebi said all necessary steps required for the first phase has been already taken by it.
In order to implement the second phase, that is to permit trading of commodity derivatives and other segments of the securities market on a single exchange, Sebi said its board on Thursday approved suitable amendments to existing regulations and these amendments would be effective from October 1, 2018. "All exchanges will be able to do securities trades as well as commodities trade from October 1, 2018. As you are aware when FMC was merged with Sebi in September 2015 there were different timelines for different items.