Stocks Market and Commodities Market to trade on single exchange from Oct 2018
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In a major step towards a simpler securities or stock and commodity 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 trading market or 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 today, a move that would help leading stock
exchanges, BSE and NSE, to launch their Intraday commodity trading platforms.
Currently, commodity
derivatives are traded on separate exchanges, which include MCX Trade Market
and NCDEX trade Market. 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 stock
and intraday commodity 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 trading market 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 or commodity trading market, 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 trading or
commodity derivatives and other segments of the securities market on a single
exchange, Sebi said its board today 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.
"Going by these timelines
we could see that October 2018 perhaps is the right time where it would be
three years after Sebi-FMC merger that all exchanges are able to deal with commodities trading market or securities trading market. This has been approved by the
board," the Sebi chairman said. Products will have to be introduced with
approval of Sebi and detailed guidelines will come out in consultation with all
stake holders, he said.
"At the brokers level we have already brought in the synergy
what was required was to bring in synergy at exchange level so from October 1
they would be eligible to deal with all products subject to stipulation and
guidelines so that these guidelines would be worked out in coming months."
When asked if it would lead to consolidation, he said that might
or may not happen. "Sebi is looking at it from point of view of securities
market. The concept is that there is single regulator at the highest level and
we are looking at it from clients point of view and investor point of view to
bring in the synergy."
Separately, Sebi's board also approved a proposal on payment of
fees by stock brokers trading in "Options" segment of
commodity derivatives or commodity trading market. "On introduction
of Options contract in commodity derivatives, the Sebi board has decided to
amend the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992, such that the
manner of calculation of turnover fees for Options contracts in commodity
derivatives shall be computed the same way as computed for Options contract in
equity derivatives," the regulator said.
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