Markets regulator Sebi today said commodity exchanges and their functionaries cannot sponsor or participate in discussions including on televisions channels and social media about trading in commodity derivatives.
The exchanges would have to ensure that their staff members are not associated with such activities, Securities and Exchange Board of India (Sebi) said in a circular.
Commodity bourses would have to lay down a suitable code of conduct for their executives and other staff members in this regard.
“The exchanges being neutral platforms, either as an institution or through their functionaries, shall not sponsor or associate themselves in any manner with programmes/ seminars/workshops/activities at various fora,” Sebi said.
Such fora would include and are not “limited to TV/Radio/ social networks website or any other media in which the discussions/suggestions are related to price behaviour, price outlook, trading strategy, buy/sell recommendations, or similar subjects related to commodity derivatives,” it said.
In a separate circular, the regulator said trading members at commodity exchanges can modify client codes after the execution of the trade to rectify a genuine error that had occurred while entering a client code at the time.
Sebi said those errors can be modified, which occurred due to communication, or punching or typing such that the original client code and the modified client code are similar to each other.
The regulator said shifting of trades to the ‘error account’ of broker would not be treated as modification of client code, provided trades in the account are subsequently liquidated in the market and not shifted to some other code.
Further, brokers would have to disclose the codes of accounts, which are classified as ‘error accounts’ to the exchanges. Besides, each broker should have a well-documented error policy approved by the management of the broker.
The commodity exchanges would have to periodically review the trades flowing to the error accounts of the brokers.
Sebi said these circulars are being issued to consolidate and update such norms prescribed by erstwhile Forward Markets Commission (FMC). FMC got merged with Sebi in September 2015.
“In order to facilitate larger participation by genuine hedgers by providing them with necessary incentives with a view to deepen the commodity derivatives market, the exchanges shall hence forth stipulate a hedge policy for granting hedge limits to their members and clients,” Sebi said.
The exchanges would have to widely publicise their respective hedge policy by holding awareness programmes for the target participants and making it publicly available on their website.
While granting hedge limit exemptions to its trading members and clients, Sebi said that exchanges would have to the broad guidelines.