AMN /
Union Finance Minister Arun Jaitley today formalised the first ever merger of two regulators, over 60-year-old commodities regulatory body Forward Markets Commission (FMC) and the younger but much bigger capital markets watchdog Exchange Board of India (SEBI).
The formal merger ceremony took place in Mumbai today in the presence of Union Finance Minister Arun Jaitley. He rang the customary stock market bell to formalise the amalgamation. The announcement of merger was made earlier this year by Finance Minister Arun Jaitley during FY16 Budget. The move aims to streamline regulation and curb wild speculations in commodities market, while facilitating further market growth.
Speaking at the function, Mr. Jaitley said SEBI-FMC merger indicates how size of our markets has grown. He said nation is no longer satisfied with 6%-8% band of growth. He said we have to continue to change with times, evolve and bring reforms. The Finance Minister said FMC-SEBI merger will bring convergence, widen size and scope of markets.
The FM said it is the crucial and critical time for India so there is no scope for mistakes. He said world has now started viewing India differently. He said market participants and regulators should brace themselves to face global challenge.
Jaitley said he is sure SEBI is ready to take up this additional responsibility and said that it needs to have a proper mechanism to capture any aberrations in the physical market that would disrupt the derivatives market. He said SEBI must ensure commodities trading is free of speculation. The FM said transparency and good regulation is necessary for long term prospect of any market. He said regulator must ensure that manipulative activities are curbed in this market and expressed confidence that scams like NSEL would be dealt with effectively.
Terming it a momentous day in regulatory architecture, SEBI Chairman U K Sinha said it has been 12 years since this merger was first announced. He said passing legislation is a very complex process. He added that except for the US and Japan, all countries have a unified regulator as far as commodity and securities markets are concerned.
Sinha said that the commodities market entities would get a timeframe of up to one year to adjust to the new regulations as they would have to follow the same norms that are applicable to their peers in the equity segment. The SEBI chief said that the regulator has also brought out a handbook for the benefit of all entities by making them aware about various rules and regulations.
Sinha said the first priority after SEBI-FMC merger is to develop trust in commodities market. He said all steps will be taken to develop the market. He said the regulator will be very cautious so as to avoid making mistakes in commodities trading, focussing on how to improve movement of prices, strengthen human resources.
SEBI’s whole-time member Rajeev Kumar Agarwal would oversee the commodities market regulation in the merged entity under the overall guidance of the Sebi Chairman.
To a question on allowing FPIs, Economic Affairs Secretary Shaktikanta Das, who was also present at the event, said that the government has to be alive to the overall price situation. He said a balance needs to be found between price stability and market development. He added that this is a challenging task and he is confident that Sebi will be able to strike a balance. Mr.Das further said government is committed to unleash reforms in various sectors.
He said draft of GST is ready to be presented before Parliament. The Economic Affairs Secretary said steps have been taken to revive domestic demand, but can’t be taken only through fiscal stimulus. He said revival has to be investment driven. Das said new scheme will be announced soon to make it simpler for foreign companies to open branch or project offices in India. He said RBI will shortly announce a scheme for floating rupee-denominated bonds overseas.
FMC chairman Ramesh Abhishek was also present at the function. Sebi was set up in 1988 as a non-statutory body for regulating the securities markets. It became an autonomous body in 1992 with fully independent powers. FMC, on the other hand, has been regulating commodities markets since 1953.