The All-India Merchants’ Chamber (ANMI) has formally requested India’s market regulators to accelerate the deployment of co-location facilities across commodity exchanges and implement tougher enforcement measures against dormant demat accounts, citing years of bureaucratic delays that continue to hamper market efficiency and investor protection.
Co-location infrastructure — which places broker servers in the same physical proximity as exchange servers to minimize latency and execution delays — remains unevenly distributed across India’s commodity trading landscape. While equity markets have benefited from widespread co-location deployment, commodity exchanges have lagged significantly, creating competitive imbalances and operational inefficiencies that frustrate smaller and mid-sized brokers. The delay has persisted despite repeated industry requests, with regulators citing infrastructure and security concerns. ANMI’s formal intervention signals growing frustration among commodity market participants who argue that further postponement disadvantages Indian commodity brokers against international competitors operating with cutting-edge execution infrastructure.
The business case for co-location in commodity markets mirrors that in equities: faster order execution, reduced latency-related losses, and levelled competitive playing fields between institutional and retail traders. For India’s commodity sector — which handles trading volumes worth hundreds of billions of rupees annually in contracts for gold, crude oil, agricultural commodities, and metals — the infrastructure gap translates directly into margin compression for brokers and execution risks for traders. A trader attempting to hedge agricultural exposure or manage commodity price exposure faces marginally higher slippage costs and execution delays compared to peers operating from co-located facilities, effectively imposing an invisible tax on market participants. ANMI’s push reflects the chamber’s assessment that the regulatory delay has become economically untenable for its members.
Alongside co-location deployment, ANMI has flagged the persistent problem of dormant demat accounts clogging the Indian securities ecosystem. Dormant accounts — those with no trading or holding activity over extended periods — inflate regulatory reporting requirements, complicate market surveillance, and create reconciliation headaches for custodians and clearing corporations. The Securities and Exchange Board of India (SEBI) has previously issued guidelines on dormant account management, but enforcement remains inconsistent across depository participants (DPs). ANMI’s request for tighter regulatory action suggests that existing frameworks lack sufficient teeth to compel systematic account closure or reactivation procedures. The chamber is likely seeking clearer enforcement timelines, penalty structures, and mandatory DP action protocols to clean up the secondary market infrastructure.
From an investor protection standpoint, dormant account proliferation poses risks that regulators cannot ignore. Abandoned demat accounts become vectors for potential misuse, including unauthorized transactions or fraudulent reactivation schemes. The regulatory burden of monitoring millions of inactive accounts diverts compliance resources that could be directed toward detecting actual fraud or market manipulation. For brokers and DPs, the presence of dormant accounts inflates their customer service and record-keeping costs without generating offsetting revenue. Retail investors, particularly those with multiple accounts accumulated over years of market participation, face confusing portfolio fragmentation that complicates tax reporting and investment tracking.
ANMI’s dual focus on infrastructure acceleration and account hygiene reflects a broader pattern in Indian financial market regulation: critical operational issues languishing in committee while the industry absorbs efficiency costs. The co-location delay, now spanning several years, represents a clear case of regulatory inertia imposing measurable economic costs. Similarly, the dormant account problem has festered because enforcement has relied on voluntary DP compliance rather than mandatory, standardized procedures with deadline-driven phase-outs. Both issues lie within regulatory jurisdiction and require no legislative change — only administrative will and implementation capacity. The fact that ANMI has escalated these requests formally suggests that behind-the-scenes industry representations have failed to generate timely regulatory response.
Market observers will watch whether SEBI and other commodity market regulators acknowledge these requests in upcoming board meetings or policy circulars. A credible regulatory response would include a concrete timeline for phased co-location expansion, with technical specifications and investment requirements clearly communicated to exchanges. On dormant accounts, tighter action would likely manifest as mandatory account review protocols, automatic deactivation procedures after specified inactivity periods, and standardized penalties for non-compliant DPs. Any regulatory signal of movement on these fronts could provide a modest boost to sentiment among brokers and commodity trading firms, who have absorbed efficiency losses and rising compliance costs during the extended delay. Conversely, continued regulatory silence would reinforce perceptions that India’s commodity market infrastructure development has plateaued, potentially steering growth capital toward offshore commodity derivatives platforms where execution infrastructure is already mature.
