CDMRD
Also written Commodity Derivatives Market Regulation Department
SEBI's dedicated department for regulating the commodity derivatives segment, created after the 2015 merger with the erstwhile commodity regulator FMC and now folded into SEBI's Market Regulation Department.
In plain language
India's commodity markets once had their own regulator. That regulator merged into SEBI in 2015.
SEBI needed a way to stop commodity oversight from getting lost inside a market regulator built mostly for shares and bonds. So it set up one internal team focused only on commodities. People called this team CDMRD, for short.
That separate team no longer stands on its own. Its work has since moved inside SEBI's main Market Regulation Department.
How it works
SEBI created a separate Commodity Derivatives Market Regulation Department (CDMRD) to regulate the commodity derivatives segment, responsible for supervising the functioning and operations of that segment across the exchanges. This followed the repeal of the Forward Contracts (Regulation) Act, 1952, with effect from 28 September 2015, when regulation of commodity derivatives shifted from the erstwhile Forward Markets Commission to SEBI, and all recognised associations under the old Act became deemed recognised stock exchanges under the Securities Contracts (Regulation) Act, 1956.
CDMRD's functions have since been merged into SEBI's Market Regulation Department, reflecting the continued integration of commodity derivatives regulation with the rest of the securities market — a trend that also produced the September 2017 circular integrating broking activities across equity and commodity derivatives markets, and the October 2018 move allowing commodity derivatives and other securities segments to trade on a single exchange.
A worked example
When SEBI first took over commodity derivatives regulation in September 2015, an exchange seeking approval to launch a new agricultural futures contract would have routed its application specifically through CDMRD — a unit staffed and organised around commodity market issues like warehousing, delivery logistics and spot price polling, distinct from SEBI's equity-market teams.
Today, the same exchange approaching SEBI for a similar approval deals with the Market Regulation Department, since CDMRD's functions have since been absorbed into it — reflecting how thoroughly commodity derivatives regulation has been folded into SEBI's mainstream securities market supervision since 2015.
Why NISM asks about it
Chapter 8 (Legal and Regulatory Environment), section 8.1.2, introduces CDMRD as part of the three-tier regulatory structure — Government of India, SEBI, and the exchanges. Expect a question on what CDMRD stands for, and one testing whether it still exists as a standalone department — it does not; it has been merged into SEBI's Market Regulation Department.
Common exam traps
- CDMRD is no longer a standalone department — it has been merged into SEBI's Market Regulation Department. A question asking "which department currently regulates commodity derivatives" should not be answered CDMRD.
- CDMRD followed the 2015 FCRA repeal, not the 1956 SCRA enactment — do not confuse the founding dates of the two Acts.
- CDMRD regulated the segment; it did not itself set commodity spot market rules, which remain a State subject under the Constitution's division of powers.
Check yourself
1.From what date were commodity derivatives and other segments of the securities markets permitted to trade on a single exchange?
- a)28 September 2015
- b)September 2017
- c)1 October 2018
- d)December 2021
Show the answer
Answer: (c) 1 October 2018
"For this, SEBI AMENDED THE SECURITIES CONTRACTS (REGULATION) (STOCK EXCHANGES AND CLEARING CORPORATION) REGULATIONS, 2012 AND PERMITTED TRADING OF COMMODITY DERIVATIVES AND OTHER SEGMENTS OF SECURITIES MARKETS ON A SINGLE EXCHANGE WITH EFFECT FROM OCTOBER 1, 2018."
All four dates in the options are real milestones in this chapter, which is what makes it a fair test:
Date ⚠️ What happened ⚠️ 28 September 2015 FCRA repealed; commodity exchanges deemed recognised stock exchanges under SCRA ⚠️ September 2017 SEBI's circular on "INTEGRATION OF BROKING ACTIVITIES IN EQUITY MARKETS AND COMMODITY DERIVATIVES MARKETS UNDER SINGLE ENTITY" — the intermediary level ⚠️ 1 October 2018 Single-exchange trading permitted — the exchange level ⚠️ December 2021 Electronic Gold Receipts included in the definition of securities The order of the two integration steps is the examinable point: brokers first, exchanges second. A single firm could serve both markets from 2017; only from October 2018 could a single exchange list both. That sequence is why a broker today offers equity and commodity derivatives under one registration, and why NSE and BSE run commodity segments alongside MCX and NCDEX.
The clearest sign the integration was regarded as finished: the CDMRD, created specially to supervise the commodity segment, "has been MERGED INTO THE MARKET REGULATION DEPARTMENT OF SEBI."
2.In the three-tier regulatory framework for commodity markets, what role does the workbook give to the Central Government?
- a)It approves the contract specifications of each commodity derivative before launch
- b)It formulates the broad policy on the recognition of commodity exchanges and the list of commodities permitted for trading in their derivative contracts
- c)It supervises the day-to-day functioning of commodity derivatives exchanges through a dedicated department
- d)It fixes the margins and daily price limits for commodity derivatives contracts
Show the answer
Answer: (b) It formulates the broad policy on the recognition of commodity exchanges and the list of commodities permitted for trading in their derivative contracts
The workbook's words: "The Central Government FORMULATES THE BROAD POLICY with regard to THE RECOGNITION OF COMMODITY EXCHANGES and THE LIST OF COMMODITIES THAT ARE PERMITTED FOR TRADING in their derivative contracts (defined as securities)." So option (b) is right.
The three tiers: Government of India, SEBI and the Exchanges. The FMC is not one of them. It ceased to exist when the FCRA was repealed with effect from 28 September 2015.
Why the others are wrong:
- (a) Contract approval sits with SEBI and the exchanges. Chapter 6 says introducing a new commodity needs SEBI's approval.
- (c) Day-to-day supervision was the job of SEBI's Commodity Derivatives Market Regulation Department (CDMRD). CDMRD "was responsible for supervising the functioning and operations of commodity derivatives segment of the exchanges" and "currently... has been merged into the Market Regulation Department of SEBI." It is a SEBI department, not a government one.
- (d) Margins and price limits are set by the exchanges and clearing corporations under SEBI's framework.
The constitutional split: "The subject of securities is under the UNION LIST in Schedule VII of the Constitution of India, whereas the SPOT MARKET TRADE in commodities particularly agriculture commodities is in the STATE LIST."
Where this is taught
Free preparation for NISM Series XVIRelated terms
- CommodityUnder Indian commodity derivatives law, any tangible good other than actionable claims, money and securities — sold in large, uniform quantities and approved by the government and SEBI for futures trading.
- Derivative under SCRASCRA's own definition of a derivative — commodity derivatives, plus any instrument deriving value from an underlying security or index — which brings commodity futures within SEBI's jurisdiction as securities.
- Three-tier regulatory frameworkThe layered structure of commodity market regulation in India — Government of India, SEBI, and the Exchanges — each with a distinct role, as against a two-tier or single-regulator structure.
- Union List and State ListThe Constitutional division, under Schedule VII, that places securities regulation under the Centre's Union List while spot-market trade in agricultural commodities falls under the states' State List.
- Integration of broking activitiesSEBI's September 2017 circular permitting equity broking and commodity derivatives broking under a single entity — the intermediary-level step that preceded single-exchange trading from 1 October 2018.