The SEBI-appointed Commodity Derivatives Advisory Committee has approved a proposal to allow eligible foreign investors to investment in commodity derivatives segment.
The proposal will now be taken up by the SEBI at its next board meeting.
Narinder Wadhwa, President, Commodity Participants Association of India said SEBI will decide on the eligible foreign entities to trade and hedge to the extent of their exposure in physical commodities.
Although there was lacklustre response by FPI, it was discussed today in CDAC meeting and members suggested for removing those restrictions to expand their participation with some checks and balances to deepen the commodities markets, sources said.
Overall commodity derivatives market depth will increase if some of the conditions are removed. FPIs May be allowed to participate both in metals and non-agriculture commodities including agriculture commodities which are not sensitive.
The recent ban on some of the agriculture commodities was also discussed at CDAC meeting with a detail presentation by Ncdex official he added.
“We feel the recent ban has dampened the sentiments of all commodities participants specially the institutional participants as they do not want uncertainties of sudden withdrawal of contracts and inconsistent policies,” said Wadhwa.
