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Informist, Tuesday, Dec. 16, 2025

MUMBAI – A panel appointed by India's market regulator has recommended easing the curbs on commodity derivatives and suggested steps to make them more attractive to institutional investors, Reuters reported on Tuesday, citing three unnamed sources. The final report on the recommendations by the panel, set up by Securities and Exchange Board of India Chairman Tuhin Kanta Pandey earlier this year, is expected to be submitted early next year.   

The panel will recommend lifting a ban on derivatives trading in seven agricultural commodities, including paddy, wheat, and crude palm oil, according to the report. Derivatives trading in these commodities has been banned multiple times since 2021 amid fears that speculative activity will spill over into the spot prices of these widely consumed commodities.

The panel will share data indicating that price movements in these major commodities did not differ materially before and after the ban, the report quoted the sources as saying. SEBI's management agreed with this opinion, the sources added. The panel is also proposing amendments to tax laws to clearly specify the applicable goods and services tax rate for commodity derivatives. "Once the panel submits its report, SEBI will request the government for changes," the report quoted one of the sources as saying. 

The SEBI panel will also recommend that trading firms be allowed to co-locate on exchange premises for trading commodity derivatives. "Most of the global firms trade via colocation so the panel and SEBI are inclined to allow it in metals and energy. On agri-commodities there have been historic inflationary concerns, so this segment may be excluded from colocation," the report quoted sources as saying. The panel will also recommend margin reduction for agricultural commodities to boost trading. 

"SEBI is waiting for the panel's report before it approaches the Reserve Bank of India (RBI) and government with a formal proposal for bank, pension fund and insurance companies to trade in commodities," the report quoted the sources as saying.  End

Compiled by Reshma Ravi

Filed by Avishek Dutta

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