Banks, insurance companies may get Sebi nod for non-agriculture trades

MUMBAI: Sebi will engage with the government to allow banks, insurance companies and pension funds to invest in non-agriculture commodity derivative markets, its chairman Tuhin Kanta Pandey said on Wednesday.

He said the capital markets regulator is also looking at a proposal to allow foreign portfolio investors to trade in non-cash settled, non-agricultural commodity derivative contracts. “We will also engage with the government to consider banks, insurance companies and pension funds to trade in these (noncash, non-agricultural) markets,” Pandey said, while speaking at the event organised by MCX.

By Dec-end, Sebi will include commodity-specific brokers in a common reporting mechanism for compliance reports, Pandey pointed out. Stating that commodity derivative markets play a very important role for the economy, Pandey said India aspires to be the “price-setter” instead of being a “price taker” at the global level.

There is a need to look at how to broaden the acceptance of Indian benchmarks at home and abroad, he said, stressing that in volatile times like the current one, the exchanges can act as a good tool of price insurance and help protect profit margins. The career bureaucrat-turned-securities regulator specifically pointed out that the recent doubling of tariffs on aluminium and copper imports by the US “directly affects” the Indian export landscape.

“In such a volatile environment, a robust derivatives market provides a powerful shield, allowing Indian producers and consumers to hedge against global price shocks,” Pandey said. He said the market becomes essential for critical minerals like lithium, cobalt, nickel and rare earth elements, which are building blocks of green energy and posed a challenge.