Friday, September 11, 2015

Clearing members and brokers of 'commodity derivative exchange' are included in SEBI norms

On Sept 3, 2015 the Government had notified the merger of Forward Markets Commission (FMC) with SEBI with effective from September 28, 2015 and, accordingly, the “Forward Contracts Regulation Act (FCRA) 1952 will get repealed and Regulation of Commodity Derivatives Market will shift to SEBI under Securities Contracts Regulation Act (SCRA) 1956 with effect from Sept 28, 2015.
Now Ahead of FMC merger with SEBI itself, SEBI has notified crucial amendments relating to stock exchanges and clearing corporations. Amendments have been made in SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 and Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012. These new norms will also come into force on September 28, 2015, the date from which SEBI shall start regulating the commodity derivatives market as a unified regulator
Key highlights of the amendments are:
1)    Clearing member, Brokers and Clearing Corporations of Commodity derivative exchange and SEBI brought together:
Now definition of ‘clearing member’ and ‘self-clearing member’ has been amended to include any person having clearing and settlement rights on a commodity derivatives exchange

Earlier the ‘clearing member’ meant a person having clearing and settlement rights in any recognised clearing corporation

2)     Annual regulatory fees For members Dealing In Commodity Derivatives:  Under amended norms, a regional commodity derivatives exchange shall have to pay to SEBI an annual regulatory fee of Rs 50,000 within 30 days of conclusion of the relevant financial year, according to the amended norms.

3)    Net worth and Deposits requirements for Members dealing in Commodity Derivatives –Under amended norms, in the case of national commodity derivatives exchanges, the net worth for a self clearing member should be Rs 1 crore and for a clearing member, the same should be Rs 3 crore.

The deposit amount in the case of national commodity derivative exchange would be Rs 50 lakh for both self-clearing and clearing members. 

4)    3-years transitional period for settlements under new SEBI norms: Under amended norms, the Commodity derivative Exchanges have been allowed to continue with the existing arrangement for clearing and settlement of trades for a period not exceeding three years from the date of commencement of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2015.