REPORT OF THE INTER-MINISTERIAL TASK
FORCE ON CONVERGENCE OF
SECURITIES
AND COMMODITY DERIVATIVES MARKETS
With the abolition
of prohibition on forward trade in all the commodities at the
beginning of the current year, the commodity derivatives market
has been totally liberalized. There is an upsurge in the interest
in this market. The participants in other financial markets, particularly
securities, look forward to the new emerging opportunities offered
by this market. However, there are some regulatory barriers to
permit them to benefit from this opportunity. Ramamoorthy Committee
set up by SEBI to look into certain issues relating to fruitful
cooperation between these two markets were specifically asked
to examine the possibilities of i) securities brokers participation
in the commodities markets; ii) utilization of infrastructural
facilities of stock exchanges by commodity exhanges; and iii)
stock exchanges as well trading in commodities derivatives. While
the committee endorsed the first two issues, on the third issue,
it opined that it could be taken up for consideration at a future
date as the two markets mature further.
The issue of convergence
of securities and commodity derivative markets was discussed at
various levels in the Government. The idea of convergence of markets,
institutions, players and regulators has been proposed by the
Finance Minister in a communication to the Minister of Consumer
Affairs, Food and Public Distribution, in response to which an
inter-ministerial Task Force was constituted under the Charimanship
Shri Wajahat Habibullah, Department of Consumer Affiars, with
other members drawn from Department of Economic Affairs, Department
of Consumer Affairs (DCA), Department of Company Affairs, Forward
Markets Commission (FMC) and SEBI. The securities exchanges and
commodities exchanges were invited to give their views on the
subject. The views received from them were considered and discussed
in the meetings of the Task Force before drafting the Report.
The Report is being
placed on the FMC and DCA websites for wider disssemination (www.fmc.gov.in
and www.fcamin.nic.in
). The Task Force proposes to visit a few commodity exchanges
and the National Stock Exchange to have on-the-spot understanding
of the issue. A panel discussion on the subject will also be held
in the National Conference of commodity Exchanges being organised
by FMC in Mumbai on September 2, 2003. Interested persons are
requested to offer their views and comments before the final Report
is submitted to the Government.
