 The Forward Markets Commission regulated commodities market since 1953  while the Securities and Exchange Board of India was set up in 1988 as a non-statutory body for regulating the securities markets and became an autonomous body in 1992 with full independent powers  Currently, India boasts of three national and six regional bourses for commodity futures in the country

 The NSEL episode underlined the need for a better and stronger regulator to safeguard investor interest and restore confidence  The Financial Sector Legislative Reforms Commission (FSLRC) had earlier stressed on the need to move away from sector-wise regulation  It proposed a system in which RBI would regulate the banking and payments system, and a Unified Financial Agency (UFA) would subsume all other financial sector regulators such as SEBI, IRDA, PFRDA and FMC, to regulate the rest of the financial

 The merger will increase economies of scope and economies of scale for the government, exchanges, financial firms and stakeholders says Arun Jaitley  He said there is no reason why the commodities market should not have options or index futures  He also said in future banks and foreign portfolio investors will also be allowed to participate in the markets

 The commodity market was shocked by the outbreak of National Spot Exchange (NSEL) crisis two years back  On 6 Aug’13 Government gave wide ranging omnibus powers to FMC to take punitive action against the NSEL defaulters  Despite NSEL sharing all the information on its trades and contracts since 2011, over 3 years before the crisis erupted with FMC and clarifying on its queries

 Even then FMC wrongly informed Ministry of Consumer affairs that NSEL had violated norms and advised its abrupt closure  If NSEL was running illegal contracts from day one, why was NSEL allowed to do so by FMC  FMC is completely silent on brokers role even after large scale clients filed complaints against leading broker entities for alleged money laundering

 Sebi has also created a separate Commodity Cell and has set up new departments for regulation of commodities derivatives market  Sebi has formed a Commodity Cell by posting its senior officials, while two internal departmental committees  (one each in Integrated Surveillance Department and Market Intermediaries Regulation and Supervision Department) have been set up

 Sebi has all necessary infrastructure to regulate the commodities market, but some feel it lacks knowledge of the commodities market  However, since several FMC officials will move to Sebi in line with the merger, such issues are likely to be sorted out  Now that the merger has been done with, below is the draw down of the journey of the commodities regulatory body and what led to the eventual convergence with the capital markets regulator Sebi