SEBI with the powers to raid, search and penal action can discipline the wrong doers and thus control the dabba trade (bucket shops), in addition to improving the overall integrity of this market.
Welcoming the merger of FMC with capital market regulator SEBI, commodity exchanges and brokers on Monday termed it a "milestone event" and said the move will initiate next set of reforms and bring more transparency and growth in the sector.
Commodities market regulator Forward Markets Commission (FMC) on Monday merged with securities market watchdog Sebi that will help strengthen as well as streamline regulatory framework to curb manipulations in the commodities derivatives segment.
"...we have no doubt that this merger will bring about more transparency in the commodity derivative market and will facilitate its growth," Country's largest commodity exchange MCX Joint Managing Director P K Singhal said in a statement.
SEBI with the powers to raid, search and penal action can discipline the wrong doers and thus control the dabba trade (bucket shops), in addition to improving the overall integrity of this market, Singhal added.
"The governance of the commodity markets is now in the able hands of a trusted, credible regulator, who has the proven experience of managing complex market situations," NCDEX Managing Director and CEO Samir Shah said in a statement.
Stating that this will help help in increasing the investor confidence, Shah said this milestone event will usher in the next set of reforms; paving the way for stronger risk management systems, broader participation and expansion of products and services.
Brokers firms also echoed the similar sentiments, and called it is as one of the most exciting moments in the regulatory architecture of our organised markets.
Geofin Comtrade CEO and MD Girish Dev said, "Exciting, we say, because never before would have market participants so eagerly waited for themselves to be regulated.
"But, here with the autonomous SEBI taking over, it ushers in hope for commodities derivatives markets to not only being revived, but drawing in more participants into these markets over the next few years."
The Securities and Exchange Board of India (Sebi) was set up in 1988 as a non-statutory body for regulating the securities markets, while it became an autonomous body in 1992 with fully independent powers.
FMC, on the other hand, has been regulating commodities markets since 1953, but lack of powers has led to wild fluctuations and alleged irregularities remaining untamed in this market segment.