Sebi allows options trading in commodities

Capital market regulator the Securities and change Board of India (Sebi) announced the a lot-awaited commodity market reform of permitting exchanges to launch options contracts.

The transfer would deepen the domestic commodity market and provide farmers and different participants a brand new hedging instrument, in a less expensive method. Sebi additionally announced a single-licence regime, permitting stockbrokers to deal in commodities and vice versa. It mentioned within a year, it might allow a single licence for exchanges as neatly.

The move will assist the Multi Commodity change (MCX) to launch equities trading, and the national inventory alternate (NSE) and the BSE to foray into the commodity derivatives area.

Addressing the media after his first board meeting as Sebi chairman, Ajay Tyagi said in contrast to fairness derivatives, options in commodities would no longer be money-settled and exact pointers on it could soon be issued. Beside commodities, Sebi made a slew of other announcements on initial public offerings (IPOs), mutual funds (MFs) and the company bond market.

The regulator accorded a professional institutional purchaser (QIB) status on systemically necessary non-banking finance corporations (NBFCs). These have internet price of greater than Rs 500 crore. The transfer will supply NBFCs greater play in the IPO market, as just about half of the difficulty dimension is reserved for QIBs. previous, NBFCs needed to invest in the non-institutional category, which has only 15 per cent reservation.

to verify transparency in the usage of proceeds, Sebi stated all IPOs raising Rs 100 crore or more in fresh fairness capital must appoint a “monitoring agency”. The agency should make certain ample supervision and utilisation of the money raised.

Sebi also tightened the framework for such businesses. except now, the appointment of the monitoring company was mandatory only for IPOs that raised over Rs 500 crore.

Tyagi stated the transfer was once proposed on fears that capital raised in IPOs may be misused or siphoned off.

The regulator eased the preferential allotments norms for banks and sure monetary establishments. The six-month lock-in requirement on pre-preferential allotment shareholding will likely be waived. also, the norms that make an entity ineligible to take part in a preferential allotment if it has offered shares of the provider within the previous six months will also be cozy.

Sebi mentioned residents and non-resident Indian (NRIs) are usually not allowed to take direct or oblique publicity to the market participatory notes (p-notes). He said the rule of thumb was once presently in the form of steadily-asked questions (FAQs) and Sebi wished to provide it more criminal sanctity.

Tyagi stated there are no fears as such of NRIs’ cash coming into the market through the p-be aware route.

Sebi additionally allowed buying MFs through e-wallets, equivalent to Paytm, Mobikwik and Freecharge.

first of all, Sebi has taken a conservative means with the aid of allowing buy of units price up to Rs 50,000 per mutual fund each and every monetary yr.

also, redemptions of such investments may also be made most effective to a bank account of the unit holder. fee to e-wallets will not be allowed through credit cards or reward points.

Sebi also allowed speedy redemption facility for liquid schemes, to permit quicker redemptions.

“Mutual fund belongings crossing the Rs 18-lakh crore mark is just right. We want to go deeper.

We wish to make use of the publish-demonetisation impression and hence, can be taking many more resolution to assist MFs,” stated Tyagi. “Enabling payments via e-wallets adds another cost possibility,” stated Kaustubh Belapurkar, director – fund research, Morningstar funding Adviser India.

Sebi introduced a brand new framework for consolidation and re-issuance of debt securities aimed toward boosting the bond market and infusing more liquidity. Tyagi said the quantity mobilised in the course of the company bond market in 2016-17 used to be better than the bank credit boom in the united states.

What got here out of the meeting

Launch of choices in commodity derivatives: publicizes reform, allowing choices buying and selling in commodity market

Single broking licence for equities and commodities: Stockbrokers will probably be allowed to deal in commodities and vice versa. inside a yr, Sebi plans a single licence for exchanges as neatly

NRIs blocked in P-notes: Sebi clarified and strengthened the regulations to bar resident and non-resident Indians from taking direct and indirect exposure to Indian markets thru P-notes

Tighter monitoring of IPO proceeds: mandatory ‘monitoring agency’ for IPOs above Rs one hundred crore to verify enough supervision and utilisation of money raised.

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