SEBI allows options trading in commodities market

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SME Times News Bureau | 27 Apr, 2017
The Securities and Exchange Board of India (SEBI) on Wednesday approved the introduction of options trading in the commodities market.

Currently, only futures contracts are permitted in the commodity derivatives trading space.

Speaking to reporters after a meeting here of the SEBI Board, Chairman Ajay Tyagi said commodity options trading is one among various measures being planned by the regulator to deepen the markets.

The Chairman, however, did not provide details on what commodities can be traded, nor the date from which trading in options can begin.

In a bid to strengthen the commodity derivatives market, SEBI had last year allowed options trading in exchanges.

The National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange of India (MCX) are the two main commodity exchanges.

Earlier this year, previous Chairman U.K. Sinha said SEBI was seeking legal opinion on options trading in commodities, which could require amendments to the Securities Contracts Regulations Act.

"To enable the commodity derivatives exchanges to organise trading of 'options', the Board has approved a proposal to amend the relevant provisions of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012," SEBI said in a statement on Wednesday.

"Detailed guidelines for trading in 'option' on commodity derivatives exchanges will be issued by SEBI," it added.

The Chairman said the board on Wednesday also approved proposals to grant a unified licence to commodity and equity brokers, as well as regulations for monitoring funds over Rs 100 crore raised through initial public offerings (IPO).

He said non-banking financial institutions (NBFCs) with net worth of over Rs 500 crore will now be allowed to participate in IPOs as Qualified Institutional Buyers (QIBs).

SEBI has also allowed investors instant access to mutual funds (MFs) up to a limit of Rs 50,000 per day, and approved the tie-up of MFs with payment banks and e-wallets for the purpose.