Providing a major fillip to the ease of doing business, commodity and capital market regulator SEBI on Thursday paved the way for integration of stock and commodity brokers.
The move will also reduce costs for investors as they can use a fund with one broker to take a position in both the commodity and stock market. This, to an extent, will also ease the margin requirement on investors.
In a notification issued on Thursday, SEBI said the restrictions on stockbrokers handling securities from dealing in commodity derivatives has been done away with.
Similarly, the restriction on stockbrokers handling commodity derivatives from dealing in other securities has also been done away with.
Therefore, it added, post these amendments, a stockbroker can deal in commodity derivatives and other securities under a single entity, thereby facilitating the ease of doing business. SEBI also allowed fungibility of funds between two asset classes — commodity and stock markets — provided the investor is serviced by the same broker.
Under the single registration process, SEBI will issue one-time registration certificate to stockbrokers and clearing members. Subsequently, permissions to act as a stock broker/clearing member of stock exchanges and clearing corporations shall be granted by the respective stock exchanges and clearing corporation after proper due diligence, it added.
Prior approval of the regulator will be required for stockbrokers only in cases where integration leads to a change in control of the stockbroker and clearing member.
To further facilitate integration, SEBI has allowed transfer of client accounts from one stockbroker to the other with the client’s express consent.
The regulator also extended all the norms issued for commodity exchanges and their members to stock exchanges and brokers.
It also repealed erstwhile commodity market regulator Forward Markets Commission’s restrictions on commodity brokers dealing in stocks, shares and other securities.