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SEBI expands foreign access to non-agricultural commodity derivatives
Under the new rules, physically settled contracts require FPIs to square off positions three days before expiry, with remaining exposure handled via designated trading members.
India’s markets regulator, SEBI, has approved a framework that allows foreign portfolio investors to trade a wider set of non-agricultural commodity derivatives on exchanges, including physically settled contracts.
The update permits FPIs to participate in non-agricultural commodity index derivatives and non-agricultural commodity derivatives that are not cash-settled. It also clarifies that for physically settled non-agricultural contracts, FPIs must square off positions three days before expiry, before the start of the tender or staggered delivery period.
SEBI’s rules restrict FPIs from increasing positions from the T-3 day. If positions remain, they can be transferred to the proprietary account of a designated trading member or trading-cum-clearing member, with the residuals devolved at the exchange-declared closing or daily settlement price, subject to applicable statutory levies.
The broader access is intended to encourage foreign investor participation and boost trading volumes in India’s commodity derivatives market, according to coverage by LiveMint Markets, citing Reuters.