The Securities and Exchange Board of India (Sebi) has made it easier for retail investors to move their money between shares and commodities, like gold and oil.The regulator last week issued an amendment to regulations that concern brokers and sub-brokers, allowing anyone registered to trade in shares to also trade in commodities, and vice-versa, without cumbersome paperwork, a second verification process, and through an alternate account.
"In the future, if a customer wants to switch asset classes, it can be done on a single click without irritants of paperwork that may earlier have pushed the customer to stick to just a single asset class,” said Lalit Thakkar, director at Angel Broking.
Large broking houses like Angel Broking, Edelweiss and Motilal Oswal have separate subsidiaries that trade in commodities. Each time an investor wants to move from shares to commodities, cheques and permissions to move money from one unit to another are required.
For such firms, the effort and cost of supporting two organisations will decline, but for the retail customer the advice wouldn’t change. Amit Rathi, director, Anand Rathi Commodities, a subsidiary of
Anand Rathi Financial Services, estimates expenses being cut by “at least” 10%. But for smaller brokers that practice solely in equities or commodities this could be a game changer.
The move is a precursor to a unified market licence for trading in any financial instrument market, where an equity exchange like NSE or BSE will be able to offer a platform for trading commodity futures and a commodity exchange like MCX or NCDEX will be able to offer equities trading.
Sebi still has to spell out the operational rules on a unified broker’s licence, but market participants are optimisticm the move will lead to an increase in turnover of both the equity and commodity derivatives markets.
Crosseas Capital managing director Rajesh Baheti is of the same view. “At the moment, a trader loses a day in moving money from one arm to another if he has to change asset classes from shares to commodities,” he said.
The Economic Times, New Delhi, 17th July 2017
Large broking houses like Angel Broking, Edelweiss and Motilal Oswal have separate subsidiaries that trade in commodities. Each time an investor wants to move from shares to commodities, cheques and permissions to move money from one unit to another are required.
For such firms, the effort and cost of supporting two organisations will decline, but for the retail customer the advice wouldn’t change. Amit Rathi, director, Anand Rathi Commodities, a subsidiary of
Anand Rathi Financial Services, estimates expenses being cut by “at least” 10%. But for smaller brokers that practice solely in equities or commodities this could be a game changer.
The move is a precursor to a unified market licence for trading in any financial instrument market, where an equity exchange like NSE or BSE will be able to offer a platform for trading commodity futures and a commodity exchange like MCX or NCDEX will be able to offer equities trading.
Sebi still has to spell out the operational rules on a unified broker’s licence, but market participants are optimisticm the move will lead to an increase in turnover of both the equity and commodity derivatives markets.
Crosseas Capital managing director Rajesh Baheti is of the same view. “At the moment, a trader loses a day in moving money from one arm to another if he has to change asset classes from shares to commodities,” he said.
The Economic Times, New Delhi, 17th July 2017
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