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Informist, Wednesday, Aug. 12, 2026

 

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--SEBI Chair: Will continue work to make commodity mkts deeper, fairer 
--SEBI Chair: Aim should be to develop Indian benchmarks based on local mkts 
--SEBI Chair: Examining wider FPI access to commodity derivatives mkt 
--SEBI Chair: Will consult with GST council to ease derivatives mkt access 
--SEBI Chair: Completed consultation on position limits for agri commodities 
--SEBI Chair: Need easier, efficient participation in commodity derivatives 
--SEBI Chair:  Derivatives mkt development must be accompained by resilience 
--SEBI Chair: State power commissions recognising need of power derivatives 
--SEBI Chair: Credible price discovery as important as physical infra 
--SEBI Chair: Growth in commodity derivatives encouraging 
--CONTEXT: SEBI Chairman Tuhin Kanta Pandey at Global Commodity Conclave 
--SEBI Chair: Commodity mkts inherently exposed to some uncertainties

 

MUMBAI – Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said the regulator will continue its efforts to make India's commodity derivatives markets deeper, fairer and more useful to the real economy, while examining wider access for foreign portfolio investors and measures to reduce regulatory and tax-related frictions.

 

Speaking at the Global Commodity Conclave, Pandey said the rapid growth in commodity derivatives trading was encouraging, but cautioned that market development must go hand in hand with resilience and robust risk management because commodity markets are inherently exposed to geopolitical, weather, trade and supply-demand uncertainties. 

 

India's commodity derivatives market has expanded sharply, with futures turnover rising 133% in 2025-26 (Apr-Mar) to INR 166 trillion and options premium turnover more than doubling to INR 16.8 trillion, he said. In the first four months of 2026-27, turnover had already reached about 65% of the previous year's level. "The growth is encouraging, but scale alone is not enough," Pandey said, adding that India should seek to translate its position as a major producer and consumer of commodities into greater influence over price discovery.

 

Pandey said credible price discovery was as important to the economy as physical infrastructure such as roads, ports and warehouses, because transparent prices help farmers decide what to plant, manufacturers plan procurement and exporters determine prices. 

 

Looking ahead, the SEBI chairman outlined four priorities, beginning with making participation in commodity derivatives easier and more efficient. The regulator is reviewing position limits and margin frameworks to reduce avoidable costs while maintaining risk controls. SEBI has completed its consultation on position limits for agricultural commodities and will issue guidelines shortly, Pandey said. It is also continuing discussions with the Goods and Services Tax Council to address tax issues that affect participants wishing to give or receive commodities through exchange mechanisms.

 

The regulator has also completed consultations on several ease-of-doing-business measures, including simplifying options contracts and extending direct market access for exchange-traded commodity derivatives to all investor categories. Pandey said broadening the participant base was another key priority, and SEBI was examining wider foreign portfolio investor access to commodity indices and physically settled non-agricultural commodity contracts through a calibrated framework.

 

On the link between derivatives and physical markets, Pandey said SEBI had completed consultation on a phased physical settlement architecture for agricultural commodities. Effective convergence between derivatives and physical markets would require strong warehousing, assaying, quality standards and credible delivery systems, he said.

 

The chairman said the development of commodity derivatives must be accompanied by market resilience. SEBI has strengthened capacity planning and real-time performance monitoring of market infrastructure institutions and created a dedicated vertical within the regulator to focus exclusively on commodity derivatives.

 

Pandey cited electricity futures as an example of innovation meeting market needs. Since their launch, the contracts have demonstrated reliable linkage with the spot market, while state electricity regulatory commissions have increasingly recognised their usefulness. Uttar Pradesh has allowed its power distribution companies to participate on a pilot basis, while Haryana has asked its utilities to examine the use of power derivatives for hedging, Pandey said. 

 

He also highlighted weather derivatives and changes to copper and iron ore contracts aimed at lowering entry barriers for hedgers and making physical delivery more practical.

 

Pandey encouraged the market ecosystem to work towards developing credible Indian benchmarks and good-delivery standards based on local market realities rather than relying predominantly on global benchmarks. "The objective should be to develop credible Indian benchmarks that reflect our own market realities," Pandey said, adding that SEBI would continue working with the government, exchanges, industry, academia and market users to build deeper, fairer and more useful commodity markets.  End

 

Reported by Kabir Sharma

Edited by Deepshikha Bhardwaj

 

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