SEBI has allowed direct market access in commodities derivative trading for foreign portfolio investors.

The direct access facilitates the clients of a broker to directly access the exchange trading system through the broker’s infrastructure to place and execute orders without manual intervention of the broker.

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The access enables FPIs to have direct control over orders, faster execution of orders, reduce the risk of errors associated with manual order entry, maintain confidentiality, lower impact costs for large orders, and implement better hedging and arbitrage strategies, said SEBI.

Last June, SEBI allowed FPIs to invest in commodity derivatives with or without actual exposure to Indian physical commodities. SEBI said FPIs can trade in all non-agricultural commodity derivatives and a few select broad agricultural commodity derivatives, which are cash-settled contracts.