On 29-09-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on participation of SEBI registered Foreign Portfolio Investors (‘FPI’s) in Exchange Traded Commodity Derivatives in India to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. The Circular comes into effect with immediate effect.

Due to the non-participation of Eligible Foreign Entities (‘EFE’) in Exchange Traded Commodity Derivatives (‘ETCD’s) which enabled them to have actual exposure to Indian commodity markets, to participate in the commodity derivative segment of recognized stock exchanges, SEBI repealed the Circular dated 09-10-2018 whereby EFEs were also permitted to participate.

Key Points:

  1. SEBI decided to allow foreign investors to participate in Indian ETCDs through FPIs route.

  2. FPIs can participate in cash settled non-agricultural commodity derivative contracts and indices.

  3. Family offices and corporates can participate as ‘Clients’ and will be allowed position limit of 20 per cent.

*Kriti Kumar, Editorial Assistant has reported this brief.

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