India’s top two stock exchanges BSE Ltd and National Stock Exchange of India Ltd on Wednesday said they will launch commodity derivatives trading from 1 October.
The two exchanges have received permission from the Securities and Exchange Board of India (Sebi) for commodity derivatives trading.
In a statement, BSE said it will begin trading in commodity derivatives with non-agriculture commodities like metals, to be followed by agricultural commodities later. NSE too will start off with non-agri commodities.
“NSE will launch its commodity derivatives segment on October 1, 2018. NSE has plans to launch derivatives trading in non-agriculture commodities in the initial phase, followed by agriculture commodities, subject to SEBI approval. This would achieve integration of trading in commodity derivatives market with other segments of the securities market at exchange level," an NSE statement said.
NSE said it has conducted multiple road shows and engaged leading industry associations to create awareness among the participants and held mock trading sessions with active participation from prospective participants.
Earlier in 28 December 2017, the market regulator had said the country would have a unified exchange regime wherein stock exchanges would be allowed to offer trading in commodities derivatives from October this year.
Kishore Narne, head - commodity & currency, Motilal Oswal Securities said the move will not have an immediate impact on the commodity market segment. “We do not believe that it would create additional liquidity or result in more volume in the commodity markets. It has been to seen how the two exchanges roll out the products and implement them to have an impact on the commodity markets," he said.
Currently, commodity derivatives are largely traded on MCX and NCDEX.
Meanwhile, Sebi, in its board meeting, on Monday, approved regulatory framework for permitting foreign entities having actual exposure to Indian commodity markets to participate in the domestic commodity derivatives markets.
Sebi said that the regulator, government and stock exchanges are taking various steps to promote the agricultural commodity derivative segment so that the benefits of agricultural commodity derivative are passed on to the farmers and Farmers Producer Organizations (FPOs). The Sebi board decided that instead of levying regulatory fee at the prescribed turnover-based slab rates, a nominal regulatory fee at a flat rate of ₹ 1 lakh per exchange would be levied on turnover arising from agricultural commodity derivatives.