By DK Aggarwal
In a significant step in direction of an easier buying and selling infrastructure, Securities and Change Board of India (SEBI) final yr introduced universalisation of inventory exchanges. The announcement for the universalisation of exchanges by integrating the contributors, brokers and operational frameworks was made by the then Finance Minister Arun Jaitley within the Price range.
The large step taken by Sebi has the potential to reinforce competitors throughout classes, thus creating deeper markets with decrease spreads and change charges. To know the difficulty, universalisation of exchanges means providing of securities and commodities buying and selling underneath the identical roof.
The mechanism permits traders to commerce in all asset classes from a single account with a extremely regulated, safer and extra clear buying and selling, clearing and settlement framework.
Furthermore, they may have entry to a unified buying and selling expertise for each asset courses utilizing a single account and scale back hassles. The transfer is probably going to assist guarantee higher liquidity and value discovery. This implies an fairness investor having margins in his account can deploy the identical to commerce in gold or crude oil futures within the commodity phase underneath the rule of universalisation of exchanges.
Since buying and selling in some commodities (valuable metals, base metals, crude oil, to call a couple of) entails forex fluctuation dangers, these may very well be hedged by promoting/shopping for rupee towards the greenback on the forex derivatives phase.
The commodity area continues to be evolving in India and has nice potential to develop within the present state of affairs. Ultimately, universalisation of Indian bourses ought to contribute to boosting competitors in commodity buying and selling with the foray of stronger gamers such because the Nationwide Inventory Change (NSE) and BSE. Each have been constantly launching commodity contracts of their bourses. Nevertheless, given the numerous variations in threat administration throughout numerous asset courses, it is going to be a problem.
Moreover, given the sensitivity of a few of commodities, there are different overarching legal guidelines that regulate pricing, warehousing, transportation and so on.
Truly, elevated diversification, industrial path, and technology-driven enclosure, backed by improved authorized, regulatory and supervisory frameworks have propelled the event and maturity of the Indian inventory market, main in direction of universalisation of exchanges. However it’s at a nascent stage and it might be too early to touch upon how progress and participation will evolve.
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Chairman and MD, SMC Investments and Advisors