Spot Price Polling Mechanism
Summary
This circular consolidates and updates norms for the Spot Price Polling Mechanism previously prescribed by the erstwhile FMC. It mandates commodity derivatives exchanges to maintain transparent policies and publicly disclose detailed polling data on their websites. The provisions are issued under Section 11(1) of the SEBI Act and become effective from September 29, 2016.
Text
Rules, directions, guidelines, instructions, circulars, or any like instruments made by the erstwhile FMC or the Central Government applicable to recognized associations under the FCRA would continue to remain in force for a period of one year from the date on which FCRA was repealed (September 29, 2015), or till such time as notified by SEBI, whichever is earlier.
This circular is being issued to consolidate and update norms related to 'Spot Price Polling Mechanism' previously prescribed by the erstwhile FMC.
Transparent discovery of spot prices is a critical factor in smooth running of futures market as the same are used as reference prices for settlement of contracts traded on the exchange platform.
In order to maintain the transparency of spot price polling process and dissemination of spot prices arrived at through spot price polling process, the commodity derivatives exchanges are directed to comply with subsequent sub-clauses.
Have a well laid down and documented policy for the spot price polling mechanism.
Display the spot price polling mechanism adopted for every contract on its website along with details including contract details, mechanism description, how prices are arrived at, tax inclusion/exclusion, outsourcing details, selection criteria, and other relevant information.
Disclose, for every contract, following details with respect to individual spot price polling participants on its website: Participants Location, Profession, Price quoted, Time, Date.
The Exchanges may assign a code such A1, A2, A3…etc. for poling participants of a particular contract and reveal his location and price (s) for the day.
This information shall be updated on Exchange website every day for every contract traded on the exchange platform.
The information shall continue to be displayed even after the expiry of the contract for a period of 3 years.
Endeavour in increasing the sample size used for fixing the daily spot prices during the last 15 days of the contract.
Review on a monthly basis the prices polled by the participants to identify participants habitually polling unrealistic prices. These participants could be put under watch and subsequently removed from the panel if such instances reoccur despite appropriate communications.
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Source: SecMarx — Spot Price Polling Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.