Investor Awareness Division

Office of Investor Assistance and Education

Securities and Exchange Board of India.

Scheme for conduct of Awareness Programs on Commodities Derivatives

Background

The Preamble of the Securities and Exchange Board of India (SEBI) describes the basic functions of SEBI as “…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”. As per the Securities Contracts Regulation Act (SCRA), 1956 amendment dated September 28, 2015 the definition of securities also includes commodities derivatives. In this regard, report on IOSCO Principles for the Regulation and Supervision of Commodity Derivatives Markets mentions that the IOSCO Principles are “set out to ensure that the physical commodity derivatives markets serve their fundamental price discovery and hedging functions, while operating free from manipulation…”

Education and Awareness initiatives of SEBI are based on the primary mandate of SEBI ie “investor protection”. Taking this thought forward into the commodities derivatives segment in line with the backdrop of IOSCO principles which say that commodities derivatives market serves the purpose of price discovery and hedging, SEBI now plans to embark upon a Commodities Derivatives Awareness Campaign.

This document sets contours for conduct of Commodities Derivatives Awareness Programs (CAPs) and gives guidelines to entities who may like to empanel with SEBI as Commodities Derivatives Trainers (CoTs).

Scheme for conduct of Awareness Programs on Commodities Derivatives

1 Overview:

With a view to spreading awareness about commodities derivatives among various stakeholders of commodities derivatives market viz.

1. Farmers
2. Farmers’ Associations
3. Farmer Producers organizations (FPOs)
4. Hedgers
5. Producers
6. Manufactures
7. Processors,
8. Traders,
9. Exporters
10. Importers
11. End-users, consumers etc.

a Scheme has been formulated whereby eligible entities interested in conducting commodities awareness programs may approach SEBI for recognition.

SEBI may, under this scheme, recognize entities which can impart education in the field of commodity derivatives on topics such as forward/ futures contracts, hedging, risks etc., related to the commodities derivatives market. SEBI may carry out awareness programs in the prescribed format(s) with entities in the field of education/ other developmental/ ancillary activities pertaining to commodities derivatives. The aim of the Scheme is to reach the farmers/ producers, farmers cooperatives/ groups etc. in various parts of the country. Recognized CoTs are expected to organize programs in small towns/ rural areas or places where majority of target participants are concentrated etc. so as to provide easy access to farmers and other stakeholders as mentioned above.

2 Eligibility Criteria for recognition of CoTs:

Applicants can be a trust/ society/ company/ institution/ NGO etc. in the field of education/ other developmental/ ancillary activities pertaining to commodity derivatives which are traded on commodity exchanges, to become Commodities Derivatives Trainers (CoTs) for SEBI.

This scheme envisages that entities may apply to SEBI to become CoTs in the format prescribed (Format is given in the annexure) provided following conditions are fulfilled before application:

Scheme for conduct of Awareness Programs on Commodities Derivatives

1) Applicant may be a trust/ society/ company/ institution /NGO etc. and have a valid certification of incorporation/ trust deed/ registration/ approval under the law of the land.

2) Applicant is in existence for at least three years at the time of applying to SEBI and has experience of working with the erstwhile Forward Market Commission or any Central or State Government body etc. in the area of education/ other developmental/ ancillary activities pertaining to commodities derivatives.

3) Experience of around 3 years in the field of training/ dealing in Commodity Derivatives.

3 Recognition by SEBI

An application for recognition as CoT shall be made in the prescribed form as specified in Annexure I. Application should be complete in all respects. SEBI reserves the right to reject any application.

a) Processing of application: Upon receipt of a duly filled application form, SEBI will process the application. While processing SEBI may seek clarifications/ further information as deemed fit.

b) Visit/ inspection: Further, SEBI may conduct a surprise visit/ inspection of the facilities of the applicant.

c) Recognition: SEBI may recognize the applicant as CoT, if SEBI so deems fit. These CoTs will form part of the Commodities derivatives Training Network (CoTN) of SEBI.

d) Period of recognition: The recognition for CoTs will be for a period so desired by SEBI. Upon expiry of such a period either SEBI may suo moto extend recognition or the CoT to apply for renewal before expiry of recognition. Application may be treated as a fresh application for recognition if received after expiry.

e) Role of recognized CoTs: The express purpose of recognition of CoTs is that CoTs do conduct education/ awareness programs for SEBI upon receiving approval of the same from SEBI in addition to any other matter specified by SEBI.

f) Change of Recognition status/ De recognition: SEBI reserves the right to alter/ change the terms/ status of recognition.

4 Proposed format of the CAPs:

The recognized CoTs will conduct awareness programs on behalf of SEBI under the aegis of the SEBI Investor Protection and Education Fund (SEBI IPEF). These CAPs will broadly follow the following format of about three hour long program which is illustrative in nature.

Scheme for conduct of Awareness Programs on Commodities Derivatives

TIME (approximate) TOPIC SPEAKER
Half an hour REGISTRATION
15 mins Lighting of Lamp and/ or Keynote Address by Chief Guest from SEBI/ CoT By SEBI Official/ CoT
official
Half an hour Role & Responsibilities of SEBI By SEBI Official/ CoT
official
Over one hour Commodities Derivatives Segment and related topics (as relevant to the audience) Lecture/ delivery by

Expert(s)/ Exchange(s)/
CoT official(s) etc

Half an hour Q & A All on dias

However, the format may be altered by SEBI depending on the nature of the program.

Cost to the Participants: The CAPs under aegis of SEBI IPEF will be free of cost to the participants.

5 Proposed Reimbursement:

CoTs must adhere to austerity given the fact that the programs are expected to be conducted in rural areas where the cost of living is lower compared to urban areas. Considering that similar programs may be done in rural areas, a reimbursement of up to Rs. 50,000 (`Fifty Thousand) per CAP may be made by SEBI for the costs incurred by CoTs after due submission of requisite bills in original including supporting bills in case some services such as making of banner etc. are outsourced by the CoTs and duly signed attendance sheet/ certificate. However, in case SEBI is funding the said program, funding/ sponsorship from any other source, will not be acceptable. These programs will be conducted after obtaining prior approval from SEBI.

The indicative heads of expenditure are as follows:

Sr. No.

Illustrative reimbursement heads

1. Hiring of Premises, banner & related charges
2. Advertisement in local newspaper and invitation Cost related to gathering people etc.
3. Refreshments provided during the workshop/ CAP
4. Travel, Lodging, Boarding, honorarium etc. of non SEBI speakers
5. Education material if not provided by SEBI.
6. Other miscellaneous expenses

Scheme for conduct of Awareness Programs on Commodities Derivatives

SEBI is liable to reject the reimbursement claim not supported by original bills. Reimbursement claims may be sent at the earliest or within one month of the conduct of the CAP.

6 Planning and program approval:

CoTs will submit following details to SEBI for approval in a reasonable time before conduct of the CAP:

1. Time and date of the proposed CAP
2. Location/address of the venue
3. Probable speakers/ experts that you would be engaging (supported with their bio data)
4. Type of target audience to be addressed;
5. The commodity/ topics to be covered; along with the material/PPT;
6. Mode of sending invitation/ publicity

Upon receipt of the aforementioned details, SEBI may give an approval of the said CAP. Upon receipt of approval, CoT may conduct the said program.

The workshop/ CAP shall have a banner “Workshop/ CAP conducted under the aegis of Investor Protection and Education Fund of SEBI”.

7 Annexure to this documents:

1. Application form
2. Claim for reimbursement of expenses to recognized CoTs for conducting CAP.
3. Format for seeking approval for proposed CAP
4. Attendance sheet

******

Annexure I

Date: _________________

Office of Investor Assistance and Education,
Investor Awareness Division,
Securities and Exchange Board of India,
SEBI Bhawan, C4-A, G Block, Bandra Kurla Complex,
Bandra East,
Mumbai 400051.

Dear Sir/ Madam,

Application for Recognition of Commodities Derivatives Trainers (CoTs)

We refer to the Scheme for conduct of Awareness Programs in Commodities Derivatives Market. We have read and understood the terms of the Scheme.

We hereby apply for recognition of Commodities Derivatives Trainers (CoTs) to impart education in the field of commodity derivatives.

We further submit that we have relevant expertise of conducting educational programs/ other developmental/ ancillary activities and have more than ___________ years of relevant experience in the area of education/ other developmental/ ancillary activities pertaining to Commodity Derivatives.

We are enclosing our application in the prescribed form, along with supporting documents.

Yours faithfully,

Authorized Signatory

(Please give name and designation)

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