Sebi to Seek Government Nod for Banks, Insurers and Pension Funds in Commodity Derivatives

Mumbai, September 17 – Tuhin Kanta Pandey, the Chairman of the Securities and Exchange Board of India (SEBI), said the regulator would be writing to the government to investigate the possibility of allowing banks, insurance companies, and pension funds to participate in the non-agricultural commodity derivatives markets to boost institutional participation in India’s commodity market ecosystem.

Growing Participation in Non-Agricultural Products

Speaking at an event held by the Multi-Commodity Exchange (MCX), Pandey said SEBI is exploring options to broaden the participant base in commodity derivatives. He pointed out that institutional investors, including banks, insurers, and pension funds, can – if allowed to invest – help create liquidity and depth in the non-agricultural commodity derivatives space.

Proposal to Include Foreign Portfolio Investors

Along with the Indian institutions, SEBI is also contemplating a proposal to allow a foreign portfolio investor (FPI) to trade in the non-agri, non-cash settled commodity derivative contracts. This would further open up the commodity markets in India to the global market, inject foreign capital and improve the pricing of commodity derivatives.

Strengthening Compliance and Transparency

According to Pandey, by December 2025, brokers dealing in discrete commodities will have a harmonization of compliance reporting. This initiative will create a uniform regulation of players, minimize regulatory arbitrage, and increase transparency in the commodity derivatives market.

Strategic Role of Commodity Markets

The SEBI chair emphasized the role of the commodity markets in facilitating India’s procurement of rare metals of strategic importance to industrial development, clean energy technologies, and long-term resource security. The regulator intends to bolster participation and strengthen compliance so that commodity markets will be an important pillar for India’s economic and strategic future.

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