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TMI BlogRevision of eligibility criteria for launching commodity futures contracts.X X X X Extracts X X X X X X X X Extracts X X X X ..... me of these norms as mentioned at paragraph 1 above were prescribed by erstwhile Forward Market Commission (FMC) and were continued after the merger of FMC with SEBI. The commodity derivatives markets have evolved since then, with the introduction of new products, participants, entry of new stock exchanges and thus, a need is felt to review the norms in the aforesaid provisions. 3. Based on representations received from market participants and deliberations by Commodity Derivatives Advisory Committee (CDAC) of SEBI, it has been decided to modify the norms under Paragraph 2.2 and Paragraph 10.1 of the Master Circular dated August 4, 2023 as under: A. Paragraph 2.2. heading may be read as under. Criteria for eligibility of derivative contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance are illustrative and not exhaustive. Any additional relevant parameter/information as deemed necessary may also be furnished while sending proposal for contracts. G. Paragraph 10.1.2. is modified as under. 10.1.2. Approval for futures contracts: Approval for futures trading in the commodities approved by SEBI is subject to the following terms and conditions: i. Approval for trading in futures contracts is subject to Rules, Byelaws and Regulations of the concerned Stock Exchange. ii. Stock exchange shall launch future contracts with contract specifications including launch calendar as approved by SEBI. Contract specifications and contract launch calendar shall be notified well in advance to the market participants on the website of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the contract specification are adhered to. viii. The permission granted for the contracts is subject to daily Mark to Market settlement of outstanding contracts as per the procedure and delivery mechanism/process specified in the Bye-laws, the Rules and the Regulations of the stock exchange. ix. The stock exchange shall ensure that there is no unhealthy speculative trading in the market, which may result in cornering or artificial rigging up or down of the prices by a particular member or group or class of members. 4. This Circular shall come into force with effect from June 1, 2024. 5. The Stock Exchanges are advised to bring the provisions of this circular to the notice of their members and also to disseminate the same on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the domestic physical market in the last three years and immediate 3 preceding months prior to the application n. Which are the other exchanges where the proposed contract is already being traded and its/ their respective market share in terms of volumes percentage of trades (estimated)? o. Value Chain of the commodity p. Degree of standardisation q. Political sensitivity/price controls r. Whether commodity is under purview of Essential commodities act / APMC Act / The Food Control Regulation Act etc. s. Geographical coverage t. Correlation with International Market u. Seasonality v. Price Volatility 2 CONTRACT Specifications with reasons a. Lot size b. Tick size c. Period of the contract (one month, two months, etc.) d. Quality standards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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