Disclosures by Stock Exchanges for Commodity Derivatives

Jan 07, 2019 | by Avantis RegTech Legal Research Team

The Securities and Exchange Board of India (EBI) on January 04, 2019 has prescribed that all recognised stock exchanges shall make additional disclosures on their websites with respect to trading in commodity derivatives.

SEBI vide circular SEBI/HO/CDMRD/DMP/2016/101 dated September 27, 2016 had prescribed certain norms regarding disclosures by Stock Exchanges on their website for commodity derivatives.

Transparency in the commodities derivatives markets has been paramount for price signals as well as its correlation with the underlying physical market activities. In order to enhance transparency to the public in Commodity Derivatives Markets and also as recommended by Commodity Derivatives Advisory Committee (CDAC), all recognised stock exchanges shall make additional disclosures on their websites with respect to trading in commodity derivatives. The formats for these disclosures are placed at Annexures-I and II (page 4-9 of the circular).

Annexure I contains format for disclosure of Open Interest and turnover for various categories of participants at Commodity as well as market level. In this regard the stock exchanges shall:

·         Categorise the participants in the following six categories:

                     i.            Farmers/FPOs

                   ii.            Value chain participants (VCPs);

                  iii.            Proprietary traders;

                 iv.            Domestic financial institutional investors;

                   v.            Foreign participants;

                 vi.            Others.

·         The categorization of the clients/members shall be made on self-declaration basis for each commodity. However, exchanges can reclassify any participant where it deems necessary to do so based on the information available with it.

·         In case self-declaration is not obtained for a particular client for a particular commodity, positions of such client in such commodity shall be clubbed with “Others” category.

·         In case there are less than 10 participants in any category, the stock exchanges while disclosing the number of participants can disclose as “less than 10”.

·         To begin with, stock exchanges shall make the disclosures on a weekly basis for every Wednesday by next Wednesday (and for next trading day in case of holiday on any Wednesday) by October 01, 2019. By April 01, 2020 onwards, such disclosures shall be made on daily basis by 6:00 PM on T+1 day.

Annexure II contains Commodity wise format of disclosure for top participants, members and market wide position limits. Stock Exchanges shall make disclosures on daily basis, latest within a month of the date of this circular. Such disclosures for any day are to be made before start of trading on the next day. The recognized stock exchange shall make necessary disclaimer that the grouping of clients has been based on the “Guidelines on Clubbing of Open Positions” issued by it.

Exchanges shall also maintain complete historical data of the above disclosures on their website in spread sheet format.

The circular is available on SEBI website at www.sebi.gov.in under the category “Circulars” and “Info for Commodity Derivatives”.

[Circular No. SEBI/HO/CDMRD/DNPMP/CIR/P/2019/08]


URL: https://www.sebi.gov.in/legal/circulars/jan-2019/disclosures-by-stock-exchanges-for-commodity-derivatives_41545.html


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