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The need to further develop commodity markets in both spot and derivative segments came up for special discussion at the Finance Minister Arun Jaitley’s post-budget meeting with SEBI board in the capital on Saturday.
The recently announced Union Budget had a proposal to look into integrating these two segments for the commodity markets.
Later at a separate board meeting of the market regulator, it was also decided to undertake a comprehensive review of the regulation pertaining to Market Infrastructure Institutions (MII) - stock exchanges, depositories and clearing corporations.
Briefing reporters after the SEBI board meeting, U K Sinha, SEBI Chairman, pointed out that the SEBI-appointed Bimal Jalan Committee had in its report recommended that the working of MIIs be reviewed after five years.
“After deliberations, the board approved the proposal for a comprehensive review of Securities Contracts (Regulation) (Stock exchanges and Clearing Corporations) Regulations, 2012 and SEBI (Depositories and Participants) Regulations, 1996 and to seek public comments on the same,” Sinha said.
The discussion paper seeking public comments will be made available on the SEBI website, he added.
NSE problem
Sinha said that the board took note of the information memorandum on various references received related to colocation facility of NSE and the examination carried out by SEBI under the guidance of its Technical Advisory Committee (TAC).
The board also took note of the steps taken by SEBI in consultation with TAC to strengthen the exchange’s trading infrastructure in the areas namely, fair and transparent data dissemination process, tools to monitor service quality of data feed, mechanism to manage system load in a fair manner, direct connectivity between colocation facility of exchanges etc.
Sinha said the concerns related to systems and processes at the exchange arising out of examination are being addressed in consultation with TAC and NSE board.
NSEL matter
Sinha said the board was also apprised about the action so far taken by SEBI against some of the brokers on the basis of examination of allegations received with respect to their role in the NSEL matter. It may be recalled that the nearly Rs 6,000-crore National Spot Exchange Ltd payment crisis came to light in July 2013 and there is no finality yet on bringing to book those responsible for this irregularity.
Off-shore Derivative Instruments
Sinha said that the board was informed about the various aspects of ODI and the steps taken by SEBI after September 2014.
The Board noted that in-view of the strict norms for ODI issuance, the notional value of ODI to the Assets Under Custody (AUC) of Foreign Portfolio Investors (FPI) has declined over the years from a high of 55.7 per cent of total AUC in June 2007 to 6.7 per cent in December 2016.
The consistent tightening of ODI norms by SEBI has not only been through increased compliances but also through improved transparency, Sinha said.
The board also noted that simultaneous liberalisation by SEBI in the registration process of FPI has made ODI less attractive vis-à-vis taking direct registration as FPI.
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