Govt to merge commodity market regulator FMC with Sebi

Last Updated: Saturday, February 28, 2015, 15:17

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New Delhi: India will have a unified regulator for commodities and capital markets, with Finance Minister Arun Jaitley on Saturday announcing that Forward Markets Commission will be merged with Sebi.

The proposed merger would help streamline monitoring of commodity futures trading and curb wild speculations.

In the wake of a major payment crisis at the National Spot Exchange Ltd, FMC was brought under Finance Ministry in 2013.

Presenting his maiden full-fledged Budget, Jaitley said that FMC would be merged with Securities and Exchange Board of India (Sebi).

"I also propose to merge the Forward Markets Commission with Sebi to strengthen regulation of commodity forward markets and reduce wild speculation. Enabling legislation, amending the Government Securities Act and the RBI Act is proposed in the Finance Bill, 2015," Jaitley said.

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).

"We have also received a large number of suggestions regarding the Indian Financial Code (IFC), which are currently being reviewed by the Justice Srikrishna Committee. I hope, sooner rather than later, to introduce the IFC in Parliament for consideration," Jaitley said.

IFC has been proposed by FSLRC.

Meanwhile, stakeholders welcomed the merger proposal with a note of caution.


Welcoming the merger proposal, NCDEX Managing Director Samir Shah said, "It is the biggest announcement for the commodity markets. It was long anticipated. The Sebi is a respected and autonomous organisation and merging FMC with it will solve many problems."

While this would enable full implementation of the provisions of FCRA, Sebi needs to build its commodity capacity and expertise, he added.

In his speech, Jaitley said that a properly functioning capital market also requires proper consumer protection.

Besides, the Minister has proposed to create a Task Force to establish a sector-neutral Financial Redressal Agency that will address grievances against all financial service providers.

"I am also glad to inform the House that work assigned to the Task Forces on the Financial Data Management Centre, the Financial Sector Appellate Tribunal, the Resolution Corporation, and the Public Debt Management Agency are progressing satisfactorily.

Mumbai-headquartered FMC was set up in 1953 under the Forward Contracts (Regulation) Act (FCRA) as a statutory body under the agesis of Consumer Affairs Ministry. It 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.