SEBI has approved changes to expand the participation of Foreign Portfolio Investors (FPIs) in India's non-agricultural commodity derivatives market. The decision was part of the SEBI Board meeting held on September 24, 2026. Under the revised framework, FPIs will be permitted to participate in additional categories of non-agricultural commodity derivative contracts, subject to specified conditions.
What has SEBI approved?
SEBI has approved FPI participation in:
- Non-agricultural index derivative contracts, including contracts that are not cash-settled
- Non-cash-settled non-agricultural commodity derivative contracts
The move expands the types of commodity derivative contracts available to eligible FPIs.
What happens with physically settled contracts?
The revised framework includes a safeguard for non-cash-settled contracts. FPIs will have to exit their positions before the delivery obligation arises. This means the framework does not provide for FPIs to remain in positions through the point at which physical delivery becomes due. The specific operational requirements will be governed by the applicable regulations and market procedures.
Why are non-agricultural commodities relevant?
Commodity derivatives allow market participants to take positions based on the prices of commodities or commodity indices.
Non-agricultural commodities can include segments such as:
- Bullion
- Base metals
- Energy commodities
The contracts available for trading depend on the products offered by recognized exchanges and the applicable regulatory framework.
What does this change for FPIs?
The decision gives eligible FPIs access to a broader set of non-agricultural commodity derivative contracts. However, participation will continue to be subject to SEBI's conditions, exchange rules, and applicable requirements. The change does not mean that every commodity derivative contract will automatically become available to every FPI.
What should investors know?
This change primarily concerns FPI participation in the commodity derivatives market. For retail investors, it is important to distinguish between a regulatory change affecting institutional participation and a change in the rules applicable to individual investors.
SOURCE: LiveMint
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