Mumbai, September 21, 2017

This was a major demand of brokers after commodity derivatives regulations came under Sebi

 The Securities & Exchange Board of India (Sebi) has allowed brokers of stock and commodity exchanges to do both businesses under one entity.

This was a major demand of brokers after commodity derivatives regulations came under Sebi, from the erstwhile Forward Markets Commission.

The change was notified in July, by amending the Securities Contracts (Regulation) Rules and Sebi (Stock Brokers and Sub-Brokers) (Amendment) Regulations. On Thursday, a circular was issued to give effect to these.

Now, business in commodity derivatives, currency derivatives and equity spot derivatives may all be done under one entity, contrary to the earlier requirement of doing commodity and equity businesses under different companies.

A one-time certificate of registration as stock broker/clearing member shall be granted by Sebi. Subsequent permissions to act as a stock broker or clearing member of other exchanges or clearing corporations shall be granted by the respective bourse or clearing corporation, after scrutiny.

Sebi's prior approval will be required by the broker only in cases where an integration would lead to change in control of the stock broker/clearing member, says the circular.

The move helps all brokers to move excess margins in clients' accounts to another segment, as all will be under one entity now. This is expected to help in efficient use of money and help in improving of business in all segments. Those commodity traders also hedging in currencies will be bigger beneficiaries.

[The Business Standard]