The commodity market regulator SEBI has raised apprehension over the high cost of trading in commodity futures market and urged the exchanges and supporting eco-system facilitators to bring down cost to attract more hedgers and investors.

SK Mohanty, Whole-time Member, SEBI, said the regulator held discussions with various potential participants to understand what is keeping them away from hedging in the commodity market and most of them expressed concern over the high incidental cost, especially related to delivery.

It is for the exchanges and supporting infrastructure providers to work on it, he said.

.

Mohanty also urged the exchanges to improve awareness and remove the misconception that there are quality and quantity issues in commodities delivered on the exchange platform, besides conveying the message that this platform is most transparent, he said at the ‘India Commodity Day 2018’ organised by MCX here on Friday.

SEBI is in talks with government agencies managing the minimum support price to buy and sell in the futures market. It is also considering to tweak the regulations so that options contracts can devolve with the delivery of that particular commodity rather than the current process of it devolving in the futures market.

SEBI is planning to widen the market by allowing the launch of new derivative products.

“We want to launch new products. Index derivative is one of them. We are in advanced stage of examining them and we are also open to other derivatives like weather and freight derivatives,” he said.

SEBI will soon make delivery compulsory in base metals and expects the eco-system such as warehousing, assaying and logistics systems to evolve, he added.

SEBI will also allow mutual funds and portfolio management service providers to participate in the commodity exchange to further deepen the market.

Related Topics
comment COMMENT NOW