SEBI’s capital norm may impact commodity-specific bourses

SEBI’s parameters for multi commodity exchanges in line with stock exchanges might lead to the closure of many commodity specific-exchanges.

“Fulfilling the capital requirement of ₹100 crore is a difficult task for Commodity Specific Exchanges (CSEs) and even some of the national multi commodity exchanges may not be able to cope with the SEBI parameters,” a trade source said.

“Commodity-specific regional exchanges like IPSTA for Pepper, Rajkot Exchange for Castor and Hapur Exchange for Gur should be considered separately for the parameters to be maintained,” Kishor Shamji, former President, IPSTA, told BusinessLine .

Trading in commodity-specific exchanges has been affected since 2000, ever since national multi commodity exchanges came into existence.

Big commodity cartels took hold of the entire trade with wide and wild fluctuations on the exchange platform. Added to this, “the activities at the National Spot Exchange have resulted in many commodity traders, who were the members of the commodity specific exchanges, falling prey to the malicious activities that have taken place at NSE and the multi commodity exchanges in the recent past,” said a trade source.

In fact, many commodity dealers are yet to come out of the shock and shortfalls. They have become victims of financial losses incurred at the National Spot Exchange and multi commodity exchanges not only in pepper but in various other commodities, starting from Guar, Guar Gum, Cumin, Coriander, Chilli, Turmeric, Chana and Castor as well as Rubber, they said.

The trade has, therefore, demanded that the commodities traded at commodity-specific exchanges should be left with those exchanges without the interference of national multi commodity exchanges.

Smaller-volume commodities should be permitted only at commodity-specific exchanges when there is a nationwide protest against commodity trading at national level exchanges, it added.

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