SEBI plans to allow banks, insurers, pension funds, FPIs in commodity derivatives
Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday said the regulator will consult the government to widen participation in the country’s commodity derivatives market.
New Delhi: Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday said the regulator will consult the government to widen participation in the country’s commodity derivatives market.
Speaking at an event organised by the Multi Commodity Exchange, Pandey said SEBI will explore allowing banks, insurance companies and pension funds to take part in the commodity derivatives segment.
He also announced that SEBI will seek government approval to let foreign portfolio investors (FPIs) trade in derivatives of non-agricultural and non-cash settled commodities.
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This, he said, will help integrate global investors into India’s commodities market.
Pandey highlighted that SEBI has already formed a committee to recommend measures for strengthening the agricultural commodities segment.
A working group will soon be set up to develop the non-agricultural commodity space, including metals.
According to the SEBI chief, the regulator’s strategy will be multi-pronged. The top priority is to maintain the integrity and safety of markets.
He said measures like real-time margin collection and continuous monitoring are essential to ensure this.
At the same time, Pandey stressed the need to deepen and widen participation in commodity trading.
He explained that commodity platforms are not only for large corporations, importers and traders, but can also serve institutional investors such as mutual funds and alternative investment funds (AIFs).
These investors are increasingly viewing metals as an attractive asset class that can improve risk-adjusted returns.
Greater institutional participation, Pandey noted, will boost liquidity and make the market more useful for hedging.
To simplify compliance, SEBI plans to bring commodity-specific brokers onto the Samuhik Prativedan Manch — a common reporting platform — by December 2025.
This step is expected to ease reporting requirements for participants.
SEBI is also working with the government to resolve GST-related challenges faced by investors who want to receive or deliver commodities through exchange platforms.
In addition, the regulator will run targeted awareness and education programmes to make commodity markets more accessible and relevant for a wider group of investors and stakeholders.
