Timelines for Compliance with various provisions of Securities Laws by Commodity Derivatives Exchanges
Summary
This circular deems recognized commodity derivatives exchanges under FCRA to be recognized stock exchanges under SCRA with effect from September 28, 2015. It mandates specific timelines for these exchanges to comply with various provisions of the Securities Contracts (Regulation) Act, 1956 and SECC Regulations. The document outlines requirements for corporatization, networth, governance, and operational adjustments during the transition period.
Text
all recognized associations (commodity derivatives exchanges) under the Forward Contracts (Regulation) Act, 1952 (‘FCRA’) are deemed to be recognized stock exchanges under the Securities Contracts (Regulation) Act, 1956 (‘SCRA’) with effect from September 28, 2015.
commodity derivatives exchanges shall comply with the provisions of SCRA, applicable provisions of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, (‘SECC Regulations’) and SEBI circular CIR/MRD/DSA/33/2012
Regional commodity derivatives exchanges shall corporatize and demutualize within a period of three years... submit a scheme for corporatization and demutualization for SEBI approval within a period of two years
Commodity derivatives exchanges shall transfer the functions of clearing and settlement of trade to a separate clearing corporation within three years
Validity of recognition of commodity derivatives exchanges under SCRA shall be taken to be the same as the validity of their recognition under FCRA
The conditions required to be continuously complied with by recognized stock exchanges as given in Regulation 7(3) of SECC Regulations shall be complied with by national commodity derivative exchanges within one year and by regional commodity derivatives exchanges within three years
Conditions required to be continuously complied with by recognized clearing corporations given in Regulation 7(4) of SECC Regulations, to the extent applicable, shall be complied with by national commodity derivatives exchanges within one year and by regional commodity derivatives exchanges within three years
Commodity derivatives exchanges shall pay the regulatory fee in terms of Securities and Exchange Board of India (Regulatory Fee on Stock Exchanges) Regulations, 2006
Any national/regional commodity derivatives exchange having a networth of less than INR 100 crore, shall achieve a minimum networth of INR 100 crores by May 5, 2017 / within three years respectively
commodity derivative exchanges shall not distribute profits in any manner to its shareholders until the requisite networth of INR 100 crores is achieved
commodity derivatives exchanges shall submit audited networth certificate from the statutory auditor on an yearly basis by the thirtieth day of September every year
National commodity derivatives exchanges shall comply with the shareholdings limits specified under SECC Regulations, 2012 by May 5, 2019
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Source: SecMarx — Timelines for Compliance with various provisions of Securities Laws by Commodity Derivatives Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.