New Delhi: Capital markets regulator SEBI expects the proposed merger of commodities regulator FMC with it to be completed in 6-12 months. While SEBI is assessing all regulatory issues and requirements for financial, infrastructure and human resources to facilitate a "timely smooth transition", it wants the Budget allocation being provided by the government for FMC staff to continue for the next 3-4 years before the regulator can generate extra resources on its own to meet the costs.
As such, SEBI does not get any grant from the government. Announced by Finance Minister Arun Jaitley in Budget for 2015-16, the merger will help streamline regulations and curb wild speculations in commodities market, while facilitating participation of domestic and foreign institutional investors and launch of new products such as options.
"The entire transition will take place over the next six months to one year," a senior official said, adding that the financial implications of the merger are still being assessed and have not been considered in SEBI 's Budget estimates for the financial year 2015-16.
"In the interim, in order to facilitate timely smooth transition in accordance with the Budget proposal, SEBI is internally making a quick preliminary assessment of regulatory issues and appropriate resource requirement in terms of financials, infrastructure, human etc," the official said. SEBI will also have to acquire sufficient space for conducting FMC related work, while recently FMC had assessed a need for approximately 30,000 square feet and the government had conveyed its approval for acquiring property, including one in Air India building in Mumbai.
"While SEBI does not receive any grant from government, going by the space constraints, resources position and need for sufficient additional space in SEBI, government has been requested to provide resources for buying or renting out space for FMC related work," as per a proposal made by the regulator.
According to Finance Bill, it will be up to SEBI to decide on the continuance of existing staff of FMC after merger. A request is being made to the government to extend the services of identified existing staff of FMC for a period of 3 years. "Further, if need arises, SEBI would also make outside recruitment to meet the requirement of experienced staff.
Therefore, the Budget allocation being provided by government for the staff of FMC needs to be continued for the next 3-5 years before SEBI can generate extra resources to meet this cost," the proposal said. Last month, SEBI had discussed the merger and the plan of action in this regard with Jaitley.
Mumbai-headquartered FMC was set up in 1953 under the Forward Contracts Regulation Act (FCRA) as a statutory body under the aegis of Consumer Affairs Ministry. It was brought under Finance Ministry in 2013. Seeking to make FMC an autonomous body, the government had proposed amendments to FCRA in 2010 but the concerned bill could not be taken up in Parliament.
