Securities and Exchange Board of India
September 23, 2016
The Managing Directors / Chief Executive Officers All Commodity Derivatives Exchanges
Dear Sir / Madam,
Sub: Regulatory Framework for Commodity Derivatives Brokers
1. As per Section 131(B) of Finance Act, 2015 all rules, directions, guidelines, instructions, circulars, or any like instruments, made by the erstwhile Forward Markets Commission (FMC) or the Central Government applicable to recognized associations under the Forward Contracts (Regulation) Act, 1952 shall continue to remain in force for a period of one year from the date on which the FCRA is repealed (September 29, 2015), or till such time as notified by SEBI, whichever is earlier, as if the FCRA had not been repealed.
2. Erstwhile FMC issued various circulars/letters/ directions to exchanges dealing in commodity derivatives for compliance by their members from time to time. Consequent to merger of FMC with SEBI, it is important that regulatory provisions for brokers across equity and commodity derivatives markets be harmonized. Accordingly, regulatory provisions have been divided into three parts as described below.
i. Part A contains details of FMC circulars which shall stand repealed and relevant SEBI circulars which shall be applicable.
ii. Part B contains details of FMC circulars contents/norms of which shall continue as they are specific to commodity derivative markets.
iii. Part C contains details of FMC circulars which shall stand repealed.
3. Part A: Following FMC circulars shall stand repealed and relevant SEBI circulars shall be applicable to all commodity derivatives exchanges including regional commodity derivative exchanges for compliance by their members.