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The Securities and Exchange Board of India (SEBI) board on Thursday approved a proposal to allow foreign portfolio investors (FPIs) to participate in a wider range of non-agricultural commodity derivatives, including physically settled contracts, as part of measures aimed at deepening participation and liquidity in India’s commodity markets.
Under the new framework, FPIs will be allowed to trade non-agricultural commodity index derivatives and non-agricultural commodity derivatives that are not cash-settled. However, for physically settled non-agricultural commodity contracts, foreign portfolio investors will have to square off their positions three days before expiry, before the start of the tender or staggered delivery period.
FPIs will not be permitted to increase their positions from the T-3 day. If any positions remain, they can be transferred to the proprietary account of a designated trading member (TM) or trading-cum-clearing member (CM).
FPIs will need to have an agreement with the relevant TM/CM for handling or squaring off any residual positions. Such positions can be devolved to the TM/CM at the exchange-declared closing or daily settlement price, with applicable statutory levies charged on the devolution.
Currently, FPIs can participate in cash-settled non-agricultural commodity derivatives, while contracts such as bullion and base metals are physically deliverable. The broader access is aimed at encouraging greater foreign investor participation and boosting trading volumes in India's commodity derivatives market.
The move is expected to benefit commodity exchanges and trading platforms, including Multi Commodity Exchange of India (MCX), BSE and NSE, by potentially widening the investor base and improving liquidity in eligible non-agricultural commodity derivatives.
Greater participation from FPIs could also support higher trading volumes and improve market depth across these contracts.
MCX controls over 95% of the total organized exchange-traded commodity derivatives market share in India, driven almost entirely by non-agricultural contracts.
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
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