Sebi to allow MFs, PMS in commex derivatives shortly

To help deepen the commodities market, the Securities and Exchange Board (Sebi) is planning to allow mutual funds and portfolio management service providers in commodity derivatives within the next six months.

Such a move will help deepen the market and provide hedging opportunities to large companies. The regulator also plans to let even foreign institutional investors after a regulatory framework is put in place. “We had several rounds of discussions with various stakeholders in the commodity value chain. Sebi is in the final stage of announcing the regulation for this segment of market participants over the next six months,” Sebi Executive Director S K Mohanty said.

Addressing an industry event organised by Ficci, he said, “We want large institutional investors that are currently trading in global exchanges to participate in our commodity platforms.”

Earlier, Sebi had allowed options trading in commodity derivatives to expand the market and enhance liquidity. The regulator also opened up the market for hedge funds registered as Category III alternative investment funds.

Meanwhile, Thomson Reuters launched an India-specific indices in association with leading commodity exchange, Multi Commodity Exchange of India.

MCX Managing Director Mrugank Paranjape said that mutual funds and PMS would bring in sticky money to commodity derivatives and encourage traction in long-term contracts. The exchange is looking at dates between October 5 and 23 to launch gold options, he said.