Mumbai: Market regulator Securities and Exchange Board of India (SEBI) is working to deepen and widen participation in the commodity derivatives market by allowing foreign portfolio investors (FPIs), banks, insurance companies, and pension funds to trade in these markets.
SEBI is also engaging with the government to resolve GST-related challenges for participants who wish to receive or deliver commodities through the exchange platform.
“We will keep working towards a regulatory framework to enable prudent institutional access to metal derivatives markets to deepen and widen participation in the commodity derivatives market,” SEBI Chairman Tuhin Kanta Pandey said while speaking at an MCX event on “Metals — From Mines to Markets.”
“A proposal to allow FPIs to trade in non-cash settled, non-agricultural commodity derivative contracts is currently under examination. We will also engage with the government to consider banks, insurance companies, and pension funds to trade in these markets,” Pandey said.
“We aim to deepen and widen participation. Our markets are for large corporations, traders, importers, and SMEs. They are also available for institutional investors like Mutual Funds and AIFs, who are increasingly recognizing metals as an asset class that improves risk-adjusted returns for investors. Enhanced institutional participation will bring in higher liquidity, making the market more attractive for hedging,” he added.
“We need to rapidly move from being price-takers to price-setters. We are aligning our markets with national priorities like ‘Make in India’ and the ‘Critical Minerals Mission’. We are building an ecosystem that is resilient to global shocks and responsive to domestic needs,” Pandey said.
“By the end of December 2025, we will include commodity-specific brokers in the Samuhik Prativedan Manch, a common reporting mechanism for compliance reports. This will ease their compliance requirements,” the SEBI chief noted.
“We have engaged and will continue to engage with the government to resolve GST-related challenges for participants who wish to receive or deliver commodities through the exchange platform,” he added.
Strengthening India’s commodity markets is high on SEBI’s regulatory agenda. A committee has already been constituted to recommend measures for deepening the agricultural commodities segment. SEBI will also form a working group for developing the non-agricultural commodity space, including metals, Pandey said.