SEBI Chairman Highlights Steps to Enhance Commodity Market Participation

The chairman of SEBI, Tuhin Kanta Pandey, recently outlined the regulator’s plan to strengthen India’s commodity markets. Speaking at the Bloomberg Forum for Investment Management, he emphasised that enhancing institutional participation in both agricultural and non-agricultural commodity markets is a priority. 

According to Pandey, this step is aimed at making the markets more attractive for hedging, offering institutions greater opportunities to manage risk effectively.

Strengthening Cash Equities and Derivatives

Apart from commodity markets, SEBI is also focusing on deepening the cash equities market and improving the derivatives segment. Pandey noted that these areas are a high priority and that any future measures will be thoughtful and consultative. The objective is to ensure that investors and market participants can access well-structured and efficient platforms for trading and risk management.

Engagement with Financial Institutions

Last month, Pandey mentioned that SEBI is working closely with the government to enable banks, insurance companies, and pension funds to participate in non-agriculture commodity derivative markets. By opening these avenues, the regulator aims to broaden the pool of participants and bring more depth to the markets. 

Additionally, SEBI is reviewing proposals to allow foreign portfolio investors to trade in non-cash settled, non-agricultural commodity derivative contracts, which could further increase liquidity and market activity.

Corporate Bonds and Bond Derivatives

The SEBI chairman also highlighted initiatives to deepen the corporate bond market. Efforts are underway to make bonds more accessible for both issuers and investors, with bond derivatives being examined as another tool to strengthen this segment. These steps aim to create a more robust debt market that complements India’s broader capital markets.

Promoting Municipal Bonds

Pandey noted that the growth of municipal bonds is being encouraged through regulatory reforms and outreach programmes. These measures are intended to provide cities and local bodies with better access to financing while offering investors new opportunities in fixed income markets.

A Consultative Approach

Throughout his address, Pandey stressed that SEBI’s approach will be consultative. The regulator plans to engage with stakeholders to ensure that reforms in commodity markets, equities, derivatives, and bonds are well-structured and aligned with the needs of both domestic and international investors.

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Conclusion

SEBI is taking a multi-pronged approach to strengthen India’s financial markets. From boosting institutional participation in commodity markets to expanding corporate and municipal bond segments, the regulator is focused on creating a more accessible and efficient trading environment.

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