SEBI issues framework for utilization of regulatory fee on Stock Exchanges

Mar 22, 2019 | by Avantis RegTech Legal Research Team


The Securities Exchange Board of India (SEBI) on March 20, 2019, in order to encourage the participation by farmers or Farmer Producer Organizations (FPOs) in agricultural commodity derivatives markets, has issued a framework for utilization of regulatory fee. SEBI has reduced the regulatory fee on Stock Exchanges with respect to turnover in agricultural commodity derivatives. The Stock Exchanges dealing with agricultural commodity derivatives should create a separate fund for the benefits of farmers or FPOs in which the regulatory fee forgone by SEBI will be deposited and utilized exclusively for the benefit of and easy participation by farmers and FPOs in agri-commodity derivatives market. 

The exchanges should follow the below guiding principles for the purpose of utilization of the earmarked fund:

•The fund will be used exclusively for the benefit of and for easy participation by farmers and FPOs in agri-commodity derivatives market. 

•The earmarked fund is primarily for reducing cost of transaction and for facilitating ease of trading by farmers or FPOs.

•Exchange will draw an action plan for full utilisation of regulatory fee in any financial year to be utilised during the succeeding financial year. Such action plan shall be drawn up by the 10th of April keeping in view the amount of fund available for the purpose.

•The exchanges will disseminate the details of the action plan with respect to participation by farmers or FPOs during the financial year on their website under intimation to SEBI.

•The fund should not be clubbed with other funds such as Investor Protection Fund (IPF) or Investor Services Fund (ISF) or Corporate Social Responsibility (CSR) Funds etc.

•The exchanges should ensure that the farmers or FPOs participating on the exchange are treated in a fair and equitable manner while utilizing the proceeds of fund for their benefit.

The exchanges may consider one or more following activities for the utilization of the fund for benefit of farmers or FPOs while preparing the action plan for a financial year:

•Funding of warehousing and/or aasaying charges for agricultural commodities deposited for the delivery on exchange platform by the farmers or FPOs.

•The cost of bags can be reimbursed or bags can be provided to Farmers or FPOs for delivery on exchange platform.

•Cost of mark to market (MTM) funding.

•Broker fee for farmers or FPOs can be subsidized.

•Delivery fee 

•Repository related fee

•Any other activity permitted by SEBI.

The exchanges should allow utilization of the fund with certain conditions such as overall amount per activity, maximum amount per farmer or FPO, maximum period etc., as may be applicable from time to time, so as to ensure fair and equitable distribution of benefit to farmers/FPOs.

 The provisions of this Circular will be effective from March 20, 2019.

[Circular No. SEBI/HO/CDMRD/DMP/CIR/P/2019/40]

Click here to download the Circular.

 


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