SEBI (Securities and Exchange Board of India) has announced that it would soon frame guidelines to permit mutual funds to invest in commodity derivatives instruments, on July 19, 2018.
The market Regulator said that it would also finalise warehousing standards for non-agriculture commodities. The regulator also added that it would think of permitting “indices” after its powerful establishment in the market.
Still the commodity derivatives market is facing challenges despite the fact that the trading volumes have increased up to 100 lakh crore Rupees, said P K Bindlish, the Head of CDMRD (Commodity Derivatives Market Regulation Department) in SEBI, addressing an ASSOCHAM (Associated Chambers of Commerce and Industry of India) event.
As a means to increase institutional participation in the commodity segment, the Market Regulator is now proceeding towards letting mutual funds.
“We are working on finalising the guidelines at the earliest,” said Bindlish.
Regarding permission for more products, he said that “indices” would be “considered only after knowing its robustness.”
MCX (Multi Commodity Exchange) and NCDEX (National Commodity & Derivatives Exchange) has already been permitted with the trading in commodity derivatives market “Option.” NCDEX has launched it in one commodity, while MCX in five commodities, said Bindlish, according to Money Control.
He also added that that more commodities would be considered after witnessing their success.
WDRA (Warehousing Development and Regulatory Authority) has done a great job as far as agri commodities are concerned. However, there is lack of guidelines and regulation from WDRA for the non-agri commodities.
In order to reinforce warehousing, the Securities and Exchange Board of India would soon frame warehousing norms for non-Agri commodities, he added further.
Shashank Saksena, adviser (financial markets), the Finance Ministry, said that they have integrated commodity and equity markets at the level of regulator and market institutions, and are still far away at the participants’ level.
SEBI has called independent trustees of mutual funds for a meeting on July 25, 2018, after a long gap of about four years, according to The HINDU Business Line.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]