When approved, stock exchanges will not have to set up a different entity to offer a platform for commodities trading.
Market regulator SEBI is likely to finalise regulations for universal exchanges by December, sources told Moneycontrol. A universal exchange is one which offers securities and commodities trading under the same roof. When approved, stock exchanges will not have to set up a different entity to offer a platform for commodities trading.
The regulator has sought a legal view internally for making a roadmap for universal exchanges.
Both BSE Ltd and the National Stock Exchange have applied for a commodity license. The exchanges are ready to launch non-agri products once they get the license.
Sources said that the Finance Ministry has been pushing SEBI to make regulations for universal exchanges.
The idea of a universal exchange seems logical now that the SEBI regulates both securities and commodities.
There is no concept of a universal exchange in the developed market as securities trading and commodities trading are regulated by separate regulators.
“The current framework of Securities Contracts (Regulation) Aact rules, disallowing an Exchange to do both capital and commodities market function, is a product of historical legacy,” said Sumit Agrawal, ex-SEBI official and Partner, Suvan Law Advisors.
“A universal exchange would mean a true merger of Forward Markets Commission (FMC) with SEBI. There will be visible benefits to everyone including to the government, SEBI, Exchanges, Companies, intermediaries and investors from the perspective of both, economies of scope and economies of scale. However, the next decade might throw new challenges in ‘developing vs regulating’ the markets,” he said.