The Securities and Exchange Commission (SEC) has received many applications for the Commodities Exchange expressions of interest (EOI) which the regulator had called early last month, according to SEC sources, but it will face a snag as the SEC Act doesn’t permit SEC to license such an exchange.
“The SEC Act has to be amended to allow such an exchange and that is a long way off,” an industry analyst told the Business Times.
However SEC says that the Commodities Exchange is a Finance Ministry proposal and they were only required to call for EOIs. “We’re only calling for EOIs. We’re not licensing this exchange,” an SEC source told the Business Times.
While agreeing that the SEC Act doesn’t permit a Commodities Exchange, he said that this is an initial step to kickstart changes to the Act. “We need to start somewhere,” he added. He said that designing a regulatory framework will follow.
“The Treasury feels that with the capital market development that is on at present, calling for the EOI to test the appetite for such an exchange is the best,” he added.
He added that the Ministry of Finance will appoint a technical evaluation committee and the SEC will call consultants to assist this committee and grant them technical expertise.