Sebi In Talks On Allowing Mutual Funds In Commodity Derivatives Trading

The Sebi is also mulling a regulatory framework to allow international portfolio investors (FPIs) in commodity markets via a consultative process.The mutual money the Sebi can be taking into consideration permitting portfolio management services(PMS) and products in commodity markets.

The market regulator is in advanced stages of talks on allowing mutual funds and portfolio management services (PMS) to alternate in commodity derivatives.

“We are in advanced stages of discussions; on the other hand i'm not committing a timeline,” stated S.K. Mohanty, executive director of the Securities and exchange Board of India (Sebi), mentioned at an industry event on Tuesday.

Sebi has initiated discussions with the trade lobby association of Mutual funds in India (Amfi), which has already submitted a report to the market regulator.

“Amfi has submitted its recommendations to the Sebi committee on commodity derivatives. This contains prudential norms and having caps on exposure levels,” stated an individual on the subject of the improvement on situation of anonymity.

The regulator additionally met around 20 PMS managers previous this month to get a sense of how they are able to be a part of commodity markets, he added.

“We expect the mutual fund and PMS to be allowed via the end of this fiscal,” said Mrugank Paranjape, CEO, Multi-Commodity exchange Ltd.

One product the industry has proposed is a gold exchange Traded Fund (ETF).“This is a ideal product and will also maintain the Rs6,000 crore gold reserve which is mendacity ideal,” stated Paranjape.

This comes after Sebi allowed hedge funds to take part in commodity markets in June this yr.

The regulator is also mulling a regulatory framework to permit foreign portfolio traders (FPIs) in commodity markets through a consultative process.

At present, Sebi is considering foreign entities, which have a business interest in India, either by the use of export or import, to take positions in the commodity derivatives market, mentioned Mohanty.

One at a time on Tuesday, the market regulator additionally clarified on international participation in commodities in international financial services and services centres (IFSCs).

“The participation would be restricted to the derivatives contracts in non-agricultural commodities best,” mentioned Sebi in the circular.

The commodity contracts can be money settled on the prices determined with the aid of out of the country exchanges and the contracts would need to be denominated in foreign currency.

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