14.8        ndian    onom
     commission provides regulatory oversight in       Singapore. Japan has a different model for its
     order to ensure—                                  derivatives market, with multiple product type
          (i) Financial integrity (i.e., to prevent    based regulators.
              systematic risk of default by one major       The Government of India merged the FMC
              operator or group of operators);         with the SEBI in September 2015.
         (ii) Market integrity (i.e., to ensure that
              futures prices are truly aligned with       SPot exchangeS
              the prospective demand and supply
              conditions), and                         In India, Spot Exchanges refer to electronic trading
                                                       platforms which facilitate purchase and sale of
        (iii) Protection and promotion of the interest
                                                       specified commodities, including agricultural
              of consumers/non-members.
                                                       commodities, metals and bullion by providing
          After assessing the market situation and
                                                       spot delivery contracts in these commodities.
     taking into account the recommendations made
     by the Board of Directors of the Commodity             This market segment functions like the equity
     Exchange, the Commission approves the rules       segment in the main stock exchanges. Alternatively,
     and regulations of the Commodity Exchanges in     this can be considered as a guaranteed direct
     accordance with which trading is to be conducted. marketing by sellers of the commodities. Spot
     It accords permission for commencement of         Exchanges leverage on the latest technology
     trading in different contracts, monitors market   available in the stock exchange framework for
     conditions continuously and takes remedial        the trading of goods. This is an innovative Indian
     measures wherever necessary by imposing various   experiment in the trading of goods and is distinct
     regulatory measures. At present, 113 commodities  from what is commonly known as ‘commodity
     are notified for future trading and there are 21  exchanges’ which trade in futures contracts in
     commodity exchanges in India including three      commodities.
     ‘national level’ exchanges (other being regional)      Spot exchange has been defined by the
     recognised for conducting futures/forward         Warehousing Development and Regulatory
     trading. The three national exchanges are:        Authority (Electronic Warehouse Receipts)
          (i) Multi-commodity Exchange of India        Regulations, 2011 as “a body corporate
              Ltd. (MCX), Mumbai. The FTIL, its        incorporated under the Companies Act, 1956
              main promoter, has been asked by the     and engaged in assisting, regulating or controlling
              FMC to exit its ownership in it after    the business of trading in electronic warehouse
              the firm was found involved in financial receipts.” However, present day spot exchange
              irregularities mid-2013 (it has 24 per   deals not just with warehouse receipts—this is an
              cent stake in MCX).                      electronic market where a farmer or a trader can
         (ii) National Commodity and Derivatives       discover the prices of commodities on a national
              Exchange Ltd. (NCDEX), Mumbai.           level and can buy or sell goods immediately (i.e.,
        (iii) National Multi-commodity Exchange of     on the ‘spot’) to anyone across the country. All
              India Ltd. (NMCE), Ahmedabad.            contracts on the exchange are compulsory delivery
          In US, which has the largest commodity       contracts—it means that all outstanding positions
     futures market, there are separate regulators     at the end of the day are marked for delivery,
     for equities and commodities. Single regulator    which implies that seller has to give delivery and
     exists in China, UK, Australia, Hong Kong and     buyer has to take the delivery.