The Securities and Exchange Board of India (SEBI) chief UK Sinha has assured the market regulator’s board that its merger with Forward Markets Commission (FMC) will be ‘smooth’. FMC is the regulator for futures trading in commodities.
The SEBI board, in its meeting on Sunday, discussed the merger with FMC, as proposed in the Budget.
“It is going to be law, so now we are preparing ourselves. The (Finance) Ministry, FMC and SEBI are in dialogue. Certain steps are required and we are working on them,” Sinha told reporters here. The board meeting was addressed by Finance Minister Arun Jaitley.
Analysts believe that the merger has some logic, as forward trading in commodities is also a capital market activity and entails a kind of financial transaction.
Besides, the Financial Sector Legislative Reforms Commission (FSLRC) has recommended bringing all financial transactions under one regulator (barring banking, which will continue to be regulated by the Reserve Bank).
This move is considered as the first legislative action for FSLRC recommendations.
On Sunday, Jaitley said SEBI talked about capacity building at its end, both in terms of ability to acquaint with the subjects and other infrastructure requirements.
Since both SEBI and FMC are under one Ministry, merger will be easier.
After the ₹5,600-crore NSEL (National Spot Exchange Ltd) payment crisis, FMC was brought under the administrative control of the Finance Ministry from the Consumer Affairs Ministry. With this, all the financial sector regulators, SEBI, RBI, IRDA and PFRDA, besides FMC, are now under one roof.
Sinha said the Finance Bill provides that different sections of it can be notified on different dates, and that is a very important point.
FMC was set up in 1953 under the Forward Contracts (Regulation) Act (FCRA) as a statutory body.
Initially, FMC was only regulating regional commodity exchanges. Its role was expanded after the emergence of national electronic trading platform in 2000.