The new move of SEBI will increase the scope and liquidity of the market.
Capital markets regulator SEBI has allowed foreign portfolio investors to trade in commodity derivatives on the exchange. SEBI has given this approval on Wednesday. The earlier trading rules have been discontinued i.e. the existing eligible foreign entity (EEE) route which required actual investment for Indian physical commodities. This move of SEBI will increase the scope and liquidity of the market. This decision was taken in the meeting of the Board of Directors of SEBI. SEBI has already allowed institutional investors like Alternative Investment Funds (AIFs), Portfolio Management Services and Mutual Funds falling under Category III to trade in such derivatives.
SEBI New Rule: Mutual funds will be able to invest money in foreign stocks, SEBI approved
Business will be approved in these segments
FPIs will be allowed to trade in all non-agricultural commodity derivatives. Apart from this, according to the order of SEBI, investment in some non-agricultural benchmark indices will also be allowed. After the new order of SEBI, if a foreign investor wants to participate in Indian exchange-traded commodity derivatives, then there will be no need for actual investment. However, initially only the actual investment will be allowed i.e. FPIs will be able to do business with full money.
ONGC-Oil India will be able to sell oil directly to private companies, will help in increasing revenue
Working group set up
FPIs have been permitted to trade in Indian Exchange Traded Commodity Derivatives (ETCD) with certain risk management norms. An executive group has been set up to review and add additional parameters to FPIs for risk management for businesses. The group will include representatives from SEBI and market participants.
(Input: ANI)
