Disclosures by Exchanges

SEBI (Securities and Exchange Board of India) issued the Commodity Derivatives (Recognition of Exchanges) Regulations, 2019 which lay down a detailed disclosure regime for recognised commodity exchanges. The purpose is to ensure market integrity, provide equal information to all participants, and protect investors from asymmetric information.

The regulations require exchanges to publish both pre‑trade and post‑trade information. Pre‑trade disclosures include contract specifications, margin requirements, and trading hours. Post‑trade disclosures consist of daily price statistics, volume, open interest, and settlement details.

For the NISM exam, questions often test whether you know which entity (exchange vs broker) is responsible for a particular piece of information. Remember: the exchange is the source of market‑wide data, while brokers disclose client‑specific information.

• SEBI circulars are the ultimate source; the exchange must follow them without deviation.
• Non‑compliance can attract monetary penalties and suspension of recognition.

The SEBI framework lists six broad categories of mandatory disclosures. Each category is designed to give participants a clear view of market activity and risk parameters.

1. Contract Specifications – includes contract size, tick size, underlying commodity grade, and expiry schedule. This helps traders understand the product they are dealing with.

2. Margin and Position Limits – daily margin rates, initial and variation margin, and position limits per client. These figures are crucial for risk management and are disclosed before the start of each trading day.

3. Real‑time Market Data – best bid/ask, last traded price, and trade‑by‑trade updates. Exchanges must stream this data with minimal latency to ensure a level playing field.

4. End‑of‑Day Statistics – closing price, high/low of the day, total volume, and open interest. These are published after market close and form the basis for many technical analyses.

5. Settlement Information – settlement price methodology, cash‑settlement or physical delivery details, and any adjustments due to quality or grade changes.

6. Corporate Actions & Notices – announcements related to contract modifications, new contract launches, or changes in trading holidays. Timely communication prevents surprise shocks.

SEBI mandates that certain disclosures be made in real‑time, while others are allowed at the end of the trading day. Real‑time data (price, volume, open interest) must be streamed to all market participants via the exchange’s website or approved data vendors.

End‑of‑day statistics are required to be posted within 30 minutes of market close. This short window ensures that participants can compute performance metrics before the next trading session.

Failure to meet these timelines is considered a breach and can attract penalties ranging from INR 1 million to suspension of the exchange’s recognition.

• Remember: “Real‑time = price & volume; End‑of‑day = summary statistics.”
• Exam questions may ask you to identify which disclosure must be posted within 30 minutes.

Exchanges are required to make disclosures publicly accessible without any subscription barrier for basic data. The primary channels include the exchange’s official website, the SEBI portal, and approved market data vendors.

Advanced data feeds (e.g., tick‑by‑tick) may be provided on a fee basis, but the underlying information (closing price, volume) must remain free. This ensures that even small investors can access essential market information.

For the exam, note that the term “publicly available” refers to the basic set of disclosures; premium data is not covered under the mandatory disclosure requirement.

SEBI’s Market Surveillance Department continuously monitors exchange disclosures through automated systems and periodic audits. Any deviation from the prescribed format, delay, or omission is flagged for investigation.

Penalties are tiered based on the severity and recurrence of the breach. First‑time violations may attract a warning and a fine up to INR 5 million, while repeated non‑compliance can lead to suspension of the exchange’s recognition for up to six months.

Exam takers should remember that the regulator’s focus is on both the *content* and the *timeliness* of disclosures.

Students often misinterpret the term “daily volume” as the total number of contracts traded over the entire month. In reality, daily volume refers to the contracts traded on that specific day and is reported at market close.

Another frequent error is assuming that “settlement price” is the same as the “closing price”. While they can be identical, the settlement price may be derived from a weighted average of trades during a specific window, as defined by the exchange.

Finally, many candidates overlook that the exchange must disclose both margin requirements and position limits. Answer choices that mention only one of these are usually incorrect.

Use the mnemonic D‑C‑M‑S‑O‑C to recall the six disclosure categories: Daily price & volume, Contract specs, Margin & limits, Settlement details, Open interest, Corporate actions.

When faced with a question on timing, remember the rule of thumb: *real‑time = instantaneous, end‑of‑day = within 30 minutes of close*.

For penalty‑related questions, keep the hierarchy in mind: warning → fine (up to INR 5 million) → suspension (up to 6 months). This sequence often appears in multiple‑choice options.