SEBI panel seeks exchange feedback on allowing FPIs in commodity options

Markets regulator Securities and Exchange Board of India’s Commodity Derivatives Advisory Committee (CDAC) has sought feedback from stock exchanges on a proposal to allow foreign portfolio investors (FPIs) to participate in options trading in commodity derivatives, sources told CNBC-TV18.The proposal was discussed during the committee’s meeting held on February 26, where members deliberated on expanding the participation of overseas investors in India’s commodity derivatives segment.

Sources said exchanges have been asked to submit their views ahead of the panel’s next meeting. The feedback will help the committee assess the feasibility, risk management framework, and market readiness for permitting FPIs to trade in commodity options.
Early discussions within the committee suggest that the participation of FPIs could initially be allowed in options contracts on precious metals such as gold and silver.The Commodity Derivatives Advisory Committee is expected to review the responses received from exchanges and may consider recommending a phased approach – beginning with gold and silver options – before expanding the scope to other commodities.

After reviewing stakeholder feedback, the committee will submit its final recommendations to the Securities and Exchange Board of India on whether FPIs should be allowed to participate in options trading in commodity derivatives.

CNBC-TV18 has reached out to SEBI for comment, and a response is awaited.