SEBI may soon enable fund houses to come up with commodity mutual funds and PMS. Talking to media at the second AMFI Mutual Fund Summit, SEBI Chief Ajay Tyagi said the market regulator is looking at it and would soon come out with the guidelines on this.
In India, mutual fund houses are not permitted to invest in commodities other than gold. However, a few fund houses have thematic funds, which invest in companies engaged in commodities business. Commodity funds would be able to invest in a broader spectrum of agricultural, metal and mining commodities such as food crops, spices, fibres, copper, aluminium, oil, gold, silver and platinum.
Tyagi said, “In my view, commodity market is still in its nascent stage. Mutual fund industry can provide liquidity to this market. However, before finalizing guidelines on this, we are examining some issues such as physical delivery and so on. It is better to go in a systematic manner. I cannot tell you the timeline on when we would issue the guidelines on this but we are seriously looking at it.”
Ever since the Budget 2015 when the finance ministry has merged commodity derivative regulator Forward Markets Commission (FMC) with SEBI, there has been talk about the possibility of mutual funds that would invest in commodity markets.
Earlier in December, the market regulator has come out with a consultation paper seeking comments from public on the proposal of permitting MFs and PMS to participate in commodity derivatives and to determine a regulatory framework to deepen the commodity and derivative market.