SEBI allows FPIs to trade in commodity derivatives
Mumbai, June 29
Capital markets regulator SEBI on Wednesday decided to allow Foreign Portfolio Investors (FPIs) to participate in the exchange-traded commodity derivatives segment, a move that will further increase depth and liquidity in the market.
The SEBI Board, at its meeting held on Wednesday, also approved amendments to rules governing mutual funds and portfolio managers.
Can deal in cash-settled contracts only
- Foreign Portfolio Investors will be allowed to trade in all non-agricultural commodity derivatives and select non-agricultural benchmark indices
- The SEBI also approved amendments to rules governing mutual funds and portfolio managers
Further, it has cleared amendments to SECC Regulations provisions relating to Limited Purpose Clearing Corporation (LPCC) for clearing and settlement of corporate bond repo transactions.
In a significant move, FPIs will be allowed to trade in all non-agricultural commodity derivatives and select non-agricultural benchmark indices. Initially, FPIs will be allowed only in cash-settled contracts.
“The participation of FPIs in Exchange Traded Commodity Derivatives (ETCD) market is expected to enhance liquidity and market depth as well as promote efficient price discovery,” SEBI said after the Board meeting.
The regulator has already allowed institutional investors such as Category III Alternative Investment Funds (AIFs), Portfolio Management Services and Mutual Funds to participate in ETCD market.
The existing route has been discontinued. Any foreign investor willing to take part in Indian ETCD segment with or without actual exposure to Indian physical commodities can do so through the FPI route. Currently, foreign entities having actual exposure to Indian commodity markets are allowed to participate in the commodity derivatives.
