According to three people with direct knowledge of the situation, a panel appointed by the Securities and Exchange Board of India (SEBI) would recommend in a final report that will be issued early next year that restrictions on commodity derivatives be loosened and that steps be taken to make them more appealing to institutional investors.
The panel was established earlier this year by SEBI, which underwent a change of leadership in March with the appointment of former bureaucrat Tuhin Kanta Pandey as chief. This year, SEBI liberalized equities market regulations under Pandey, and it is anticipated to implement changes for commodity derivative markets.
The group will suggest that the prohibition on trading derivatives in seven agricultural commodities—such as wheat, paddy, and crude palm oil—be lifted. Since 2021, trading in derivatives for these commodities has been prohibited on several occasions because of worries that speculative activity could affect the actual pricing of these commonly used commodities.
SEBI was in talks with the government and central bank to allow banks and pension funds to trade commodities, according to a September Reuters story.
