1. In terms of Finance Act, 2015, the associations recognized under the erstwhile Forward
Contracts (Regulation)
Act, 1952 as on 28th September, 2015 are
deemed to be recognized
stock exchanges
under the Securities
Contracts (Regulation) Act,
1956. This circular applies to all such commodity derivatives exchanges as defined in the Securities Contracts
(Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations,
2015.
2.
The Ministry of Finance, vide Gazette Notification S.O.2630 (E), dated September 24,
2015 has delegated the powers exercisable by it, inter alia, under section 7 of Forward
Contracts (Regulation)
Act, 1952 to SEBI.
3. The erstwhile
Forward Markets Commission (FMC), vide its Circular No. 9/1/2014-MKT-
I (Vol-II), dated May 19, 2015, had directed commodity derivatives exchanges, who have
suspended their trading operations,
to refund clients margin money, resolve client
disputes, refund members’ deposits
and in case any
exchange fails to revive their trading
operations
within 12 months from the
date of suspension of trading, FMC had specified the steps that
shall be initiated
to cancel their registration and lead to withdrawal of recognition of such
exchanges.
4. SEBI has reviewed the said circular and has decided that, if there is no trading operation
on the platform of any commodity derivatives exchanges for more than twelve months,
then in terms of the above circular, such
exchange shall be liable to exit.
5. In addition to the above, henceforth, all National Commodity Derivative Exchanges shall
continuously meet the turnover criteria of Rs. 1000 crores per annum. The Regional
Commodity Exchanges shall ensure that they have at least 5% of the nation-wide market share of the commodity, which is principally
traded on their platform. In case the National and Regional Commodity Exchanges fail to meet the above criteria for 2 consecutive
years,
they
shall be liable to
exit.
6. In the event a recognized commodity derivatives exchange, for any reason suspends its
trading operations, it shall
resume
its trading
only after
ensuring
that
adequate and
effective trading systems, clearing
and
settlement systems,
monitoring and surveillance
mechanisms, risk management systems are put in place and only after complying with all other
regulatory requirements stipulated by SEBI from time to time. Further, such recognized commodity derivatives exchanges shall resume trading operations only
after obtaining prior approval from
SEBI.
7. In case any
commodity derivatives exchange proposes to surrender its recognition
voluntarily or whose recognition is proposed to be withdrawn by
SEBI, the concerned Exchange shall be directed to comply with the following:
7.1 The concerned commodity derivatives exchange shall not alienate any assets of the
exchange without
taking prior approval
of SEBI.
7.2 Treatment
of the assets of de-recognized exchange:
7.2.1 The concerned commodity derivatives exchange shall be permitted to distribute
its
assets subject to certain conditions as laid down in this circular as well as other guidelines
that
may be issued
by SEBI, Government, or any other statutory authority, from
time to time.
7.2.2 For
the
purpose of valuation of the assets
of the commodity derivative
exchange, a valuation
agency
shall be appointed by
SEBI. All the valuation charges
shall be paid
by
the concerned exchange.
7.2.3 The
quantum of assets for
distribution will
be available after payment
of
statutory dues including income tax, transfer of funds as specified in para 7.3,
payment of dues as specified in para
7.4, refund of deposit (refundable) to the stock
brokers / clearing members including
their
initial contribution / deposit to Settlement
Guarantee Fund/
Trade Guarantee
Fund (SGF/TGF)
and contribution to SEBI as specified
in para 7.5.4
7.3 The concerned exchange shall transfer the Investor Protection Fund or any such fund to the SEBI
Investor
Protection
and Education Fund.
7.4 The concerned exchange shall pay following dues to SEBI:
7.4.1 The dues outstanding to SEBI and the annual
regulatory fee.
7.4.2 The
outstanding registration fees of brokers/trading members of such de-
recognised stock exchanges as specified in the SEBI (Stock Brokers and Sub
Brokers) Regulations, 1992 till the date
of such de-recognition.
7.4.2.1 Dues of the brokers to SEBI shall be recovered by the exchange out of
the brokers’ deposits / capital / share of sale proceeds / winding up proceeds dividend payable,
etc. available with the exchange.
7.4.2.2 The exchange will be liable to make good any shortfall in collection of
dues of the brokers to SEBI.
7.5 Other Conditions:
7.5.1 In case any commodity
derivatives exchange, after de-recognition, continues as corporate entity under the Companies Act, 2013, it shall not use the expression
‘stock exchange’ , ‘commodity derivative exchange’ or ‘exchange’ or any variant in its name or in its subsidiaries name so as to avoid any
representation of present or past affiliation
with the exchange.
7.5.2 The Sale / distribution
/ transfer of assets / winding up of such exchanges /
companies shall be subject to the applicable
laws in force.
7.5.3 The concerned commodity
derivatives exchange shall set aside sufficient funds in order
to
provide
for
settlement of any claims,
pertaining to pending
arbitration cases, arbitration awards, not implemented, if any, liabilities/claims
of contingent nature, if any, and unresolved investors complaints/ grievances
lying with
the
exchange.
7.5.4 In case of de-recognition and exit, the stock exchange shall contribute up to
20% of its assets (after tax) towards
SEBI
Investor Protection and Education
Fund (IPEF) for investor protection and in order to cover future liabilities, if
any. The contribution may be decided by SEBI taking into account, inter alia, the
governance standards of
the
commodity derivatives exchange and estimation of future liabilities.
8. SEBI may impose additional conditions as deemed fit in the interest of trade or in the public interest
including securities
market.
9.
This circular shall come into force with immediate effect.
10.
This circular is issued in exercise of powers conferred under Section 11(1) and 11(2) (j) of the
Securities and Exchange
Board
of
India Act,
1992, read with Section
5 of the Securities Contracts (Regulation)
Act, 1956, to
protect the interest of
investors in securities
and to promote the development of, and to regulate the
securities market.
11. This circular is available on
SEBI
website at www.sebi.gov.in.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Official Blog Fema India Experts Connect with our Facebook Page:- Click and Like our Page Subscribe our Email updates like other 13,300 Members, Free/Easy/Comfortableway
