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Sebi lays down principles of financial market infra for commodity exchanges

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Capital markets regulator Securities and Exchange Board of India (Sebi) on Friday said commodity derivatives exchanges having annual turnover of more than Rs5 trillion in previous financial year will be considered as systemically important financial market infrastructures (FMIs).
Currently, all commodity exchanges themselves are clearing and settling trade executed on their platforms. They are acting as central counterparties (CCP) in these markets.
FMIs are required to comply with the principles of financial market infrastructures (PFMIs) specified by IOSCO (International Organisation of Securities Commissions).
The PFMIs comprise 24 rules for providing effective regulation, supervision and oversight to financial market infrastructures. They are designed to ensure that the infrastructure supporting global financial markets is robust and well placed to withstand financial shocks.
In a circular, Sebi said that it “has been decided that commodity derivatives exchanges (currently providing in-house clearing services) having annual turnover of more than Rs5 trillion in previous financial year shall be deemed to be systemically important FMIs”.
Sebi said National Commodity & Derivatives Exchange Ltd (NCDEX) and Multi Commodity Exchange of India Ltd (MCX) will have to comply with the principles of financial market infrastructures specified by IOSCO until their clearing and settlement functions are transferred to recognized clearing corporations. FMIs that are determined by national authorities to be systemically important are expected to observe these principles.
Mint New Delhi,17th December 2016

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