SEBI Mulls Allowing Banks, Insurers, Pension Funds In Commodity Derivatives
SEBI will also seek government's approval to permit FPIs to trade in derivatives of non-agricultural and non-cash settled commodities.
Securities and Exchange Board of India Chairman Tuhin Kanta Pandey on Tuesday announced that the regulator will consult the government on widening participation in commodity derivatives.
Pandey, at an event organised by Multi Commodity Exchange, said SEBI will explore allowing banks, insurance companies and pension funds in the commodity derivatives market.
The regulator will also seek government's approval to permit foreign portfolio investors (FPIs) to trade in derivatives of non-agricultural and non-cash settled commodities, further integrating global investors into India’s commodities landscape.
Pandey mentioned that SEBI has already set up a committee to recommend measures for deepening the agricultural commodities segment and will soon constitute a working group to develop the non-agricultural commodity space, including metals.
The regulator’s approach will be multi-pronged. The first priority is to strengthen the integrity and safety of markets. Measures like real-time margin collection and continuous monitoring are seen as non-negotiables, the SEBI chief said.
Pandey also stressed the need to deepen and widen participation in commodity markets. These platforms are not only for large corporations, traders, and importers, but also for institutional investors like mutual funds and alternative investment funds (AIFs), which are increasingly recognising metals as an asset class that improves risk-adjusted returns, he added.
Enhanced institutional participation, he said, will bring higher liquidity and make the market more attractive for hedging purposes.
To ease compliance and encourage broader participation, SEBI plans to include commodity-specific brokers in the Samuhik Prativedan Manch—a common reporting platform—by Dec 2025.
This step is expected to simplify compliance requirements. The regulator is also working closely with the government to resolve GST-related challenges for participants who wish to receive or deliver commodities through exchange platforms.
In addition, targeted awareness and education programs will be run to make these markets more accessible and relevant to a wider set of investors and stakeholders.
