Regularizing Pro-Trading for Commodity Brokers

The merger of Forward market commission (FMC) with Security Exchange Board of India (SEBI) has enlarged the scope of market regulation for SEBI by bringing commodity derivative market into its domain. Since merger of two regulators in September 2015 in an attempt to align commodity market with equity market, SEBI has been taking several initiatives. In line with this objective, of late SEBI has issued yet another circular dated 25th April 2016 for mandating Commodity Derivative Brokers to disclose their proprietary trading and details of pro-account trading terminals to its clients.
Discloser of proprietary trading
For fulfilling the purpose of increased transparency in dealings between the commodity broker and their clients, the provision of SEBI circular (Dated 19th Nov. 2003) are extended to commodity derivative markets. The provisions of the circular requires that every broker shall disclose to his client whether he does proprietary trading as well or not. The commodity brokers are now required to disclose the above information within one month from date of this circular to its existing client and same shall be disclosed upfront in taking up any new assignments from new clients. In case of commodity brokers who was earlier not involved in the proprietary trading, but choose to do it later, then he shall disclose such intentions to his clients. The commodity derivative exchange are further required to amend their bye- laws in order to incorporate requirements of these disclosers mandated by circulars.
Discloser of Pro-account trading terminals
In order to monitor and to further regulate the pro-account trading the provision of SEBI circular dated (27TH AUG. 2003) are extended to commodity derivative trading. According to the requirements of the above dated SEBI circular the facility of pro-account trading shall be available through trading terminal at identified location only and the trading terminals located at a place other than identified location shall be utilized only for placing orders on behalf of clients. If in case the broker requires the pro-account facility to be extended to it from multiple locations then broker shall submit an undertaking to exchange and the exchange shall after proper due diligence may extend such facility. The same provisions are now mandated for Commodity derivative exchanges as well and they are required to amend their bye-laws in conformity to above provision.
In broad sense it could be viewed as an appreciable move by SEBI to regulate an important player of commodity derivative market and to lower the possibility of fraud in the market.

Comments

Post a Comment

Popular posts from this blog

Leaves & Holidays under Indian Labour & Employment Laws

Image
Holidays and Leaves of workers in India are governed principally by the Factory Act, 1948 and state shops and establishment acts. Weekend Holidays Mr. Pankaj Singla Sr. Associate +919971508320 pankaj@indiacp.com In India, the law prescribes maximum number of hours a week a worker may not be employed beyond. An adult worker shall not be employed for more than 48 (forty eight) hours in a week and not more than 9 (nine) hours in a day. Weekly holiday is compulsory as per the Factories Act. First day of the week i.e. Sunday shall be a weekly holiday. The employer has to make sure that no worker works more than 10 days without a rest day of 24 hours. Therefore, if the worker is asked to work on weekly
Click to read more »

SEBI's Circulars About Enhancing Liquidity And Curbing Manipulation Regarding Illiquid Scrips

Image
SEBI recently has come out with two different circulars in respect to illiquid scrips wherein one circular talks about enhancing liquidity in the illiquid scrips by promoting incentives by stock exchanges on trading in such scrips, another circular aims at curbing manipulations in the illiquid scrips by introducing Periodic Call Auction in illiquid scrips. Ms. Deepika Vijay Sawhney Partner +919818316936 deepika@indiacp.com The definition of illiquid scrips is kept different in both the circulars with the definition being much wider in case of scrips qualifying for Periodic Call Auctions. The provisions of both the circulars are discussed in detail hereunder: 1. Introduction of Liquidity Enhancement Scheme for illiquid scrips in Equity Cash Market by Circular dated February 08, 2013:
Click to read more »

Work Hours and Overtime under the Factory Act, 1948 and Shops & Establishment Act

Image
India has two major laws concerning working hours of workers i.e. the Factory Act, 1948 and Shops & Establishment Act. The regulations related to the working hours can be separated into four broad categories that help demarcate the dimensions of the discussion. Working Hours for Factory Workers; I. Employment of Adults: Mr. Pankaj Singla Sr. Associate +919971508320 pankaj@indiacp.com An adult worker shall not be employed for more than 48 (forty eight) hours in a week and not more than 9 (nine) hours in a day. A compulsory rest of at least half an hour (30 minutes) between each period of work  and such period of work shall not exceed five hours. Total period of work inclusive of rest interval cannot be more than 10.5 hours. The Chief Inspector may by giving a reason in writing  increase the workday time up to twelve hours. According to Minimum Wages Act, 1948 the working day of a worker shall be so arranged that inclusive of the interval of rest it shall n...
Click to read more »