With an aim to deepen the nascent commodity market, SEBI is likely to give its approval for mutual funds to trade in commodity markets, while the regulator is also in talks with RBI to allow institutional investors like banks and FPIs to trade in the segment.
“Mutual funds’ participation in commodities derivatives would be the first one to happen among institutional investors,” the Securities and Exchange Board of India (SEBI) Chairman, U K Sinha, today said, and hinted that the move could be implemented in a month.
Sinha, whose term as SBEI Chairman ends on March 1, was speaking to reporters on the sidelines of the regulator’s international conference on commodity derivatives.
On allowing banks, alternative investment funds and foreign portfolio investors (FPIs) to participate in commodity markets, he said SEBI is in active consultation with the Reserve Bank over the issue.
“Our argument with RBI has been, in any case bank’s have huge exposure to commodities through the lending programme.
We have been asking them to disclose that. Let a beginning be made by the corporates in disclosing that and then you yourself discover there is a need to allow them to hedge also,” Sinha said.
SEBI, which had started regulating commodity markets after the merger of Forward Markets Commission (FMC) with the regulator in September 2015, is working towards developing the commodity markets by bringing in more participants like FPIs, insurance and mutual funds.
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