Securities and Alternate Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday mentioned a proposal to allow international portfolio buyers (FPIs) to commerce in non-cash settled, non-agricultural commodity spinoff contracts is at present being reviewed.
With an intention to strengthen the home commodity markets, he mentioned that Sebi has already constituted a committee to suggest measures for deepening the agricultural commodities phase. A working group for growing the non-agricultural commodity area, together with metals, will likely be constituted, the chairman mentioned.
“A proposal to permit FPIs to commerce in non-cash settled non-agricultural commodity spinoff contracts is at present underneath examination,” Pandey mentioned at an occasion organised by MCX. He launched a report on ‘Industrial Power: Monetary Depth – Base Metals Derivatives Serving a ₹20 Trillion Market’ by MCX.
At current, FPIs can take part in commodity derivatives markets via non-deliverable and cash-settled contracts. Within the commodities derivatives market, non-deliverable and money – settled contracts are derivatives which, on expiry, don’t lead to a bodily supply of a commodity. The non-agricultural commodity derivatives embrace valuable, industrial and base metals.
As soon as finalised, the transfer is prone to entice extra FPIs into the home commodity derivatives market. The announcement comes days after the Sebi board authorised a proposal to introduce a single automated window for international buyers. FPIs have been on a promoting spree within the home market, offloading Rs 61,184 crore of equities since July this yr.
On the Multi Commodity Alternate (MCX), FPIs’ day by day buying and selling quantity within the commodities derivatives market at present is round Rs 15,000 crore. Following the Sebi Chairman’s announcement, MCX share worth jumped over 5 per cent throughout intraday trades. The commodity derivatives change’s share closed at Rs 7,923 apiece, up 3.63 per cent, on the NSE.
Commenting on the event, mentioned Anand Rathi group’s director (commodity, foreign money and Present Metropolis, IFSC), Naveen Mathur, mentioned, “Though a framework needs to be developed for FPIs to take part within the non-agricultural, non-cash settled derivatives market, the proposal by Sebi is a welcome step in broadening of commodity derivatives market, which is the necessity of an hour.”
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The strategic push to develop the Indian commodity derivatives market would certainly assist India to be price-setter and never a price-taker, he mentioned.
The Sebi Chairman additional highlighted the regulator’s multi-pronged technique to deepen and widen participation in commodities market. He mentioned that home markets are for giant companies, merchants, importers, and SMEs. They’re additionally out there for institutional buyers like mutual funds and (different funding funds (AIFs), who’re more and more recognizing metals as an asset class that improves risk-adjusted returns for buyers
“Enhanced institutional participation will usher in greater liquidity, making the market extra enticing for hedging. We’ll preserve working in the direction of a regulatory framework to allow prudent institutional entry to those markets,” he mentioned.
The chairman additionally mentioned that Sebi will have interaction with the federal government to think about banks, insurance coverage corporations, and pension funds to commerce within the commodities market.
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He mentioned as a way to foster market growth and innovation, Sebi will encourage exchanges to consistently evolve.
“By December 2025 finish, we are going to embrace commodity-specific brokers within the Samuhik Prativedan Manch, a typical reporting mechanism for compliance reviews. This can ease their compliance necessities,” he mentioned.
The regulator will proceed to interact with the federal government to resolve items and providers tax (GST) associated challenges for members who want to obtain or ship commodities via the change platform, Pandey acknowledged.