[ad_1]
“Participation of FPIs in Exchange Trade” commodity derivatives It is expected to enhance liquidity and market depth as well as promote efficient price discovery.” SEBI said in a release after the board meeting.
The regulator said that FPIs will be allowed to trade in all non-farm commodity derivatives and select non-farm benchmark indices.
For starters, FPIs will be allowed in cash-settled only, the regulator said contracts,
Currently, crude oil, natural gas and indices are cash settlement; Whereas in others, merchants must deliver goods as part of the settlement.
The regulator has closed the existing eligible foreign entity route, which required genuine exposure to Indian physical goods.
SEBI said any foreign investor who wishes to participate in Indian exchange traded commodity derivatives, with or without actual exposure to Indian physical commodities, may do so through the FPI route.
“While they have limited participation only to non-farm and cash settlement contracts for now, this could be a small step towards expanding the reach of our markets,” said Kishor Narne, Head – Commodities & Currencies,
, “As India develops into an economic giant, it is important to integrate our commodity markets with global markets. This move opens the door for free flow of capital and ease of doing business by foreigners that bridges the pricing gap. and will help increase liquidity in our markets.”
Foreign portfolio investors including individuals, family offices and corporates are permitted exposure of 20% of the client level position limit in a particular commodity derivatives contract, similar to currency derivatives.
SEBI has already allowed institutional investors such as Category III AIFs (alternative investment funds), portfolio management services and mutual funds to participate in the exchange traded commodity derivatives segment, but this has not affected the liquidity in the market.
Naveen Mathur, Director – Commodity and Currency, Anand Rathi Shares & Stock Brokers said, “This was a much-awaited move that will enhance the wider participation of players in the commodity derivatives segment.” “SEBI has enabled all major institutional players to participate in this segment.”
The regulator said it would inform the effective date through a circular.
The SEBI board also approved a proposal to change the rules governing Limited Purpose Clearing Corporation (LPCC) for clearing and settlement of corporate bond repo transactions.
“Over time, LPCC will put in place a mechanism for meeting the net worth requirements under the PSS (Payment and Settlement System) Act for risk management and infusion of additional capital in a phased manner commensurate with the growing business volumes,” SEBI said.
In consultation with the capital markets regulator, Reserve
Will review outsourcing agreements of LPCC with respect to its critical IT support infrastructure to run core activities after two or three years.
The regulator’s board also approved amendments to mutual fund rules to remove the applicability of the definition of ‘associate’ to sponsors who invest in various companies on behalf of beneficiaries of insurance policies or such other schemes.
[ad_2]
Source link
