Working groups constituted by the market regulator, the Securities and Exchange Board of India (Sebi), are planning to review the delivery and settlement framework and existing regulatory norms in the agricultural commodity derivatives segment and have submitted their reports to Chairman Tuhin Kanta Pandey, according to the regulator.
The expert panels were tasked with assessing whether the existing framework regulating margins, position limits, and delivery and settlement mechanisms could be improved without undermining market integrity.
“The Working Groups set up by Sebi in the agri commodity derivatives segment for review of the current framework of delivery and settlement and review of current regulatory norms presented their reports to Sebi Chairman,” Sebi said in a post on X.
Working group on non-agricultural commodity derivatives
In December, Pandey announced that Sebi would establish another working group to review the non-agricultural commodity derivatives segment after consulting with stakeholders.
“After due consultation with all stakeholders, we are going to form another working group to review the non-agricultural commodity derivative segment. This working group will be notified very shortly,” PTI quoted Pandey.
The Chairman noted that expert groups formed by the regulator, which focus on agricultural commodities, are reviewing whether the regulatory framework for margins, position limits, and delivery and settlement mechanisms can be optimized without harming market integrity. “Their recommendations will assist us in taking necessary developmental measures after due consultation with all stakeholders.”
The move comes amid a period of rapid expansion in India’s commodity derivatives market. Pandey mentioned that commodity markets have been under Sebi’s supervision since 2015 and now include 104 notified commodities and variants, with 34 unique commodities actively available for trading, Mint reported earlier.
Last year, the market regulator had already established an expert group to strengthen the agricultural commodities derivatives segment and enhance participation.
Additionally, Sebi engaged in discussions with the Reserve Bank of India and the Insurance Regulatory and Development Authority of India to facilitate the participation of banks and insurance companies in commodity derivatives.
“Enhanced institutional participation will bring in higher liquidity, making the market more attractive for hedging,” Pandey said.
The regulator is also working with the central government to resolve goods and services tax (GST)-related issues faced by participants involved in delivering commodities through exchange platforms. Addressing these concerns is essential for strengthening the connection between derivatives markets and physical trade, noted the Sebi chief.
