India’s capital markets regulator is planning to revamp commodity market rules to introduce transparency, reduce risks and include new participants, such as banks, mutual funds and foreign portfolio investors, to improve liquidity.
The makeover plan was proposed by the Securities and Exchange Board of India’s (Sebi) Commodity Derivatives Market Advisory Committee at its first meeting on Friday, three people directly familiar with the development said.
The panel was formed after the commodities market regulator, Forward Markets Commission, was merged with Sebi in September 2015.
Mint has reviewed a copy of the panel’s agenda note.
The proposed norms are likely to be introduced after floating a discussion paper on the matter within a month, the three people said, requesting anonymity.
To weed out trading risks taken by investors because of limitations in types of commodities contracts, the panel has proposed introduction of new exchange-traded products such as options based on commodities. The committee has also proposed to revise warehousing norms, improve the delivery and settlement mechanism, and look at ways to improve the electronic connectivity between the physical market, the warehouse supply chain and the commodity exchanges.
