Sebi proposes to increase FPI play in commodities
Presently, abroad buyers can commerce in non-agricultural commodity spinoff contracts which are solely money settled. For commodity index derivatives, FPIs at present can take part solely the place the index and its underlying contracts are cash-settled.
In a session paper issued on Tuesday, Sebi has proposed eradicating this restriction as index derivatives are at all times cash-settled no matter whether or not their underlying contracts are cash-settled. For non-agricultural commodity derivatives, that are bodily settled and never by money, Sebi has proposed that FPIs should be allowed to take positions in such contracts however compulsorily sq. off or roll over their positions earlier than the beginning of the tender interval, which is three days earlier than expiry of the contract.
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“It will additionally facilitate higher integration of India’s commodity derivatives market with worldwide commodity markets and assist the event of Indian commodity contracts as credible worth discovery venues,” mentioned Sebi, which has invited feedback on the proposals. It mentioned international buyers are allowed to commerce bodily settled commodity spinoff contracts in worldwide markets.
