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SEBI expands foreign access to non-agri commodity derivatives
The change allows foreign portfolio investors to trade physically settled non-agri commodities with required position square offs before tender or staggered delivery, and SEBI also overhauled portfolio management service rules.
India’s securities regulator, SEBI, approved changes that widen foreign portfolio investor access to India’s non-agricultural commodity market derivatives, according to LiveMint Markets.
SEBI permitted FPIs to engage in physically settled non-agricultural commodities and revised position handling rules. For physically settled contracts, FPIs must square off positions before the start of the tender or the staggered delivery period, three days before expiry. If they do not, open positions could be automatically transferred to a designated trading member’s, or trading-cum-clearing member’s, proprietary account.
The regulator said the move is aimed at improving foreign investor participation and boosting volumes in India’s commodity segment. SEBI also approved an overhaul of portfolio management service (PMS) regulations, including allowing mutual-fund-only PMS schemes and expanding discretionary PMS firms’ investments into investment-grade unlisted debt securities.
SEBI further updated its settlement framework, after a consultation paper was issued in August proposing a review of its settlement rules. The new PMS norms also allow access to overseas markets through investments in listed foreign equities, listed debt securities, overseas mutual funds, and overseas real estate investment trusts.