Moving one step closer towards having a single regulator for all securities and derivatives, the government announced the merger of the Forward Markets Commission and SEBI.
Why a merger was necessary?
- The idea of a unified regulator was being contemplated and debated upon in the government circles since 1997 with a view to avoid an Asian currency crises kind of scenario.
- The merger was triggered by the Rs. 5,600-crore payment default that grounded the National Spot Exchange (NSEL).
- Long standing recommendations finally accepted– In 2003, an inter-ministerial group headed by the then consumer affairs secretary, Wajahat Habibullah had proposed the merger of the securities and commodity derivatives market. Later, the Percy Mistry Committee and also another headed by Raghuram Rajan had also made the same recommendations. In 2013, when the FMC was moved from the Consumer Affairs ministry to the Finance Ministry, the same debate ensued.
- The merger is expected to strengthen regulation of the commodity forward markets and reduce wild speculation.
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