Investors may soon get to trade shares and commodities with One account

The Securities and Exchange Board of India (Sebi) has made it easier for retail investors to move their money between shares and commodities, like gold and oil.

The regulator last week issued an amendment to regulations that concern brokers and sub-brokers, allowing anyone registered to trade in shares to also trade in commodities, and vice versa, without cumbersome paperwork, a second verification process, and through an alternate account.

Large broking houses like Angel Broking, Edelweiss and Motilal Oswal have separate subsidiaries that trade in commodities. Each time an investor wants to move from shares to commodities, cheques and permissions to move money from one unit to another are required. For such firms, the effort and cost of supporting two organizations will decline, but for the retail customer the advice wouldn’t change.
Sebi still has to spell out the operational rules on a unified broker’s license, but market participants are optimistic the move will lead to an increase in turnover of both the equity and commodity derivatives markets. Crosse as Capital managing director Rajesh Baheti is of the same view. “At the moment, a trader loses a day in moving money from one arm to another if he has to change asset classes from shares to commodities,” he said.
Unlike the equity market, which has a cash as well as a derivatives segment, the commodity market only offers derivatives trading because the spot market in commodities is regulated by individual state governments. Turnover in equity derivatives is significantly higher than the commodity counterpart.

Another benefit of the unified license is that traders can easily switch over to the commodity segment after the stock exchanges close at 3:30 pm. The commodity exchanges run from 10 am to 11:30 pm.



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