SEBI Proposes To Allow Mutual Funds And Portfolio Managers In Commodity Derivatives
Market regulator SEBI has sought stakeholder opinion on allowing mutual funds and portfolio managers to invest in the commodity derivative market.
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India had recommended that commodity markets should be opened up to domestic and foreign institutional investors in a phased manner.
Currently, fund houses can launch only one kind of commodity mutual fund – Gold ETFs which invest in gold and gold-related instruments such as the gold deposit scheme and gold monetisation scheme. Gold ETFs are required to invest 95 percent of their assets under management in gold and gold related instruments. Total AUM of Gold ETFs at the end of Oct. 31, 2017 stood at Rs 5017 crore with 3.55 lakh folios, according to SEBI's discussion paper.
SEBI has sought industry feedback on whether mutual funds can be permitted to invest in commodity derivatives and the routes through which they can participate. The regulator asked in its discussion paper whether commodity-based ETFs, open ended funds and arbitrage funds should be allowed. It also sought stakeholder feedback on whether existing schemes should be allowed to invest in commodity derivatives.
Existing SEBI regulations also prevent portfolio managers from investing in the commodity derivatives market though they can invest in securities which includes commodity derivatives.
On this, the regulator has proposed allowing investment in derivatives through borrowing, which is presently not permitted. The regulator is wary of allowing investing in high value commodity derivatives contracts from individual clients account as it could lead to concentration risk. It has, instead, proposed pooling of investments in exchange-traded commodity derivatives. The regulator will have to take a final decision on the extent of leveraging that would be allowed and the safeguards that need to be put in place.
The regulator has sought comments on the draft consultation paper by Dec. 31.
Also Read: With Broker Integration, SEBI Paves Way For Expansion Of Commodity Client Pool
-
Navigating Friction And Energy Realities: An Analysis Of Marco Rubio's October Visit To India
Occurring at a critical juncture marked by stalled trade negotiations and escalating geopolitical pressures over global energy supplies, the visit offers a profound window into modern US-India relations.
-
India Exports Capital. Why Not Export Trusteeship?
The big question, then, is whether India can build an institution that global borrowers, investors, banks, and lawyers can trust, even without an Indian connection.
-
France's Economy & Politics Are In Crisis | The Reason Why
Let's look at how the French economy and politics evolved under Nicolas Sarkozy, Franois Hollande and Emmanuel Macron.
-
You May Inherit The Business. You Must Earn Its Credibility.
Succession tests the founder's ability to share authority as much as it tests the next generation's readiness to assume it.
-
Signing Deals Is One Thing; Making Them Work Is Another | The Week In Whys
Sometimes, things don't turn out as planned. Indian companies have lost some bids to rivals, some projects won't produce until 2030.
-
FOMC Wall, PERM Suspension, Hospital Stocks | Talking Points This Week
A PERM suspension would directly affect green-card sponsorship rather than H-1B visas, so the near-term earnings impact could remain relatively limited. The key question is whether this marks a new phase in US scrutiny of Indian IT.
-
Everything, Everywhere, All At Once: Dalal Street's Week To Forget | Joining The Dots
Visa curbs, a Starlink spat and cancer drug caps: what connects this week's shocks for Indian markets
-
India Is Going Abroad For Critical Minerals. But It May Take Years To Pay Off | The Reason Why
Although India's steps are in the right direction, they remain modest compared with India's growing dependence.
-
When Everyone Has AI, What Gives You An Edge?
India's young workforce is entering an uncertain world of work where powerful AI tools are becoming widely accessible. The advantage will belong to those who combine deep expertise with digital fluency, and the distinctly human capabilities that technology cannot manufacture.
-
Wrong Labels, High Pesticide Residues Holding Back Agri Exports | The Reason Why
India needs stronger domestic food-safety and labelling standards, with best practices becoming part of everyday business for farmers, traders and food companies.
