Union Government notifies merger of FMC with SEBI

Highlights:  

  • The government has notified the merger of commodities regulator Forward Market Commission with the Securities and Exchange Board of India (SEBI).
  • It will be effect from 28 September 2015.
  • As a result, of this notification  FCRA,1952  will get repealed and regulation of commodity derivatives market will shift to SEBI under Securities Contracts Regulation Act (SCRA) 1956 with effect from 28th September, 2015 
  • A unified regulator for commodities and capital markets will help streamline monitoring of commodity futures trading and curb wild speculations. 
  • The Financial Sector Legislative Reforms Commission (FSLRC) had recommended that Sebi, IRDA, PFRDA and FMC should be merged into a single entity into a unified financial agency (UFA). 

What is Forward Markets Commission (FMC) ?

  • The Forward Markets Commission (FMC) is the chief regulator of commodity futures markets in India. 
  • As of July 2014, it regulated Rs 17 trillion worth of commodity trades in India
  • It is headquartered in Mumbai and this financial regulatory agency is overseen by the Ministry of Finance.
  • The Commission allows commodity trading in 22 exchanges in India, of which 6 are national
  • In the wake of a Rs 5,500-crore payment crisis at the National Spot Exchange Ltd, FMC was brought under Finance Ministry in 2013. 
  • In the beginning, FMC was only regulating regional commodity exchanges and its role was expanded after the emergence of national electronic trading platform in early 2000.