Stalwart Advisors

SEBI to allow NSE & BSE to operate in Commodities w.e.f. Oct 2018

Based on SEBI Board meeting held on 28th December 2017, it has decided to permit stock exchanges (NSE & BSE) to operate in commodities as well. The amendment is expected to be effective from 1st Oct 2018.

While the complete press release of the board meeting can be read here: https://www.sebi.gov.in/media/press-releases/dec-2017/sebi-board-meeting_37183.html , the specific part pertaining to this announcement is copied below.

Integration of trading in commodity derivatives market with other segments of securities market at exchange level
Hon’ble Union Finance Minister, while presenting the Union budget for the FY 2017-2018, proposed that the commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks. For the sake of smoother implementation of the above budget announcement regarding integration between commodity derivatives and rest of the securities markets, it was decided that the integration would be achieved in two phases. In Phase-I, it was proposed to have integration at Intermediary level. In Phase-II, necessary steps would be taken to enable a single exchange to operate various segments such as equity, equity derivatives, commodity derivatives, currency derivatives, interest rate futures & debt etc.With regards to Phase-I, all necessary steps required to enable integration of commodity derivatives market with rest of the securities markets at intermediary’s level have been taken by SEBI.In order to implement phase II i.e. to permit trading of commodity derivatives and other segments of securities market on single exchange, the Board approved the proposal to remove the restrictions by making suitable amendments to Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporation) Regulations, 2012 (“SECC Regulations”). The amendments to the SECC Regulations would be effective from October 1, 2018.

As mentioned in the ICR on page 37 under Risk & Concerns, we did envisage this and explained why we believe it isn't a big threat for MCX. We are reproducing the same below for quick reference:

The stock continues to be on our BUY list with a suggested allocation of 5%.


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