Utilization of Fund Created out of the Regulatory Fee Forgone by SEBI – Additional Guidelines

Last updated: 20 October 2020

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The Securities and Exchange Board of India (SEBI) has issued additional guidelines on how stock exchanges can utilise funds created from regulatory fees. These funds are intended to encourage farmers and Farmer Producer Organisations (FPOs) to participate more actively in agricultural commodity derivatives markets. The updated guidelines permit the use of these funds for reimbursing mandi taxes, assaying, storage, and transportation costs, as well as incentivising participation in options trading.

Securities and Exchange Board of India CIRCULAR SEBI/HO/CDMRD/DNPMP/CIR/P/2020/206 October 19, 2020 To, The Managing Directors / Chief Executive Officers All Recognized Stock Exchanges having Commodity Derivatives Segment Dear Sir / Madam, Sub: Utilization of Fund Created out

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FAQ :

The fund was created to encourage the participation of Farmers/FPOs in agricultural commodity derivatives markets and to facilitate their easy participation.

Due to low participation by Farmers/FPOs and challenges posed by the pandemic, a significant portion of the fund remained unutilised. The additional guidelines aim to facilitate its utilisation.

The fund can now be used for reimbursement of Mandi tax, assaying, cleaning, drying, sorting, storage and transportation charges, incentivising option premiums for purchasing 'options in goods', and reimbursement of fees levied by the Clearing Corporation.

Stock exchanges are advised to revise their action plans, disseminate revised plans on their website, and make monthly disclosures regarding the fund's corpus and utilisation. Details will also be included in the Monthly Development Report (MDR).

Yes, all other extant provisions of the circular dated March 20, 2019, shall continue to remain in force.