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SEBI Allows Stock Exchanges to Launch Multiple Contracts on Same Commodity
On 11th January 2023, the Securities and Exchange Board of India (SEBI) released a circular[1] allowing stock exchanges to launch multiple contracts on the same commodity in the commodity derivatives segment. The said circular has been issued under section 11(1) of the Securities and Exchange Board of India Act, 1992 in order to increase the participation of investors in the commodity derivatives segment. This move comes after stock exchanges expressed that they wished to launch multiple contracts on the same commodity to serve all value chain participants because single contracts have (especially in the case of metal contracts) limited the participation of investors. This matter was discussed in the Commodity Derivatives Advisory Committee of SEBI. SEBI has also issued certain advisory guidelines in the circular which are as follows:
- Necessary amendments must be made to the existing bye-laws, rules, and regulations by the stock exchanges to give effect to the circular.
- Members of the exchanges must be notified of this circular and the stock exchanges have to publish the same on their websites.
- The status of the implementation of the circular must be communicated to SEBI.
The circular is to come into effect immediately (i.e., from 11th January 2023).
[1] Circular No. SEBI/HO/MRD/MRD-POD-1/P/CIR/2023/12
