Report of the Inter-ministerial Task Force on Convergence of Securities and Commodity Derivative Market

With the abolition of prohibition on forward trade in all the commodities at the beginning of 2003, the commodity derivativesmarket has been totally liberalized. The Ramamoorthy Committee set up by SEBI to look into certainissues relating to fruitful cooperation between these two markets were specifically asked to examine the possibilities of: i) securities brokers participation in the commodities markets; ii) utilization of infrastructural facilities of stock exchanges by commodity exchanges; and iii) stock exchanges as well trading in commodities derivatives. While the committee endorsed the first two issues, on the third issue, it opined that it could be taken up for consideration at a future date as the two markets mature further. The issue of convergence of securities and commodity derivative markets was discussed at various levels in the Government. The idea ofconvergence of markets, institutions, players and regulators has been proposed by the Finance Minister in response to which aninter-ministerial Task Force was constituted under the Department of Consumer Affairs.