Traders on MCX make a beeline to register with SEBI

The process of getting commodity members to register themselves with SEBI is fast catching up. MCX has received registration requests from 600 members out of 750 active trading members. The country’s largest exchange has 1,700 registered members. The registration process was in response to the SEBI diktat making it mandatory for all commodity members to register with it within three months.

The deadline for registration expires on December 28. Members have to register with SEBI through the commodity exchanges. Commodity exchanges have to process relevant documents received from trading members and upload it to SEBI.

“We have formed a separate team to process the applications received and upload it on the SEBI website. So far, 150 applications are screened and is ready for loading with SEBI,” said PK Singhal, Joint Managing Director, MCX.

Meanwhile, the National Commodity and Derivatives Exchange has received applications from 350 members for registration with SEBI. Of the 797 registered members, 472 members have traded during financial year 2014-15, said an NCDEX spokesperson.

“We expect all active members to be registered with SEBI before the prescribed deadline,” he said.

New norms after merger

Before the merger of the Forward Markets Commission with SEBI two months ago, members were required to register only with the exchanges. Post-merger, SEBI put in place new norms for commodity exchanges, the commodity derivatives market and its brokers.

The lukewarm response for member registrations with SEBI is the result of tough norms. Many trading-cum-clearing members are downgrading themselves to trading members due to the stringent net worth and deposit criteria. According to the new regulation, the net worth of self-clearing members should be “Rs.1 crore and for clearing members it has been fixed at Rs.3 crore. Both these members should deposit Rs.50 lakh with the commodity exchanges.

Some of the farmer organisations, which were members of the commodity exchanges, would now have to change their strategy and trade through brokers, thus incurring huge brokerage costs.