Sebi will "engage" with the government to allow banks, insurance companies and pension funds to trade in non-cash, non-agricultural commodity derivative markets, its chairman Tuhin Kanta Pandey said on Wednesday. He was speaking at an event organised by the commodities bourse MCX.
He also said the regulator is also looking at a proposal to allow foreign portfolio investors to trade in non-cash settled, non-agricultural commodity derivative contracts.
By December-end, Sebi will include commodity-specific brokers in a common reporting mechanism for compliance reports, he said.
Stating that commodity derivatives play a very important role in the economy, Pandey said we should aspire 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 the benchmarks at home and abroad, he said, stressing that in volatile times like the current one, exchanges can act as a good tool of price insurance and help protect profit margins. He specifically pointed to the US doubling of tariffs on aluminium and copper exports, which "directly affects" our export landscape.
"In such a volatile environment, a robust derivatives market provides a powerful shield, allowing our producers and consumers to hedge against global price shocks," Pandey said.
Pandey said the market becomes very essential in the case of critical minerals like lithium, cobalt, nickel and rare earth elements, which are building blocks of green energy and posed a challenge.
"What can our markets do as we pursue our goal of self-reliance in critical minerals? Can we develop financial instruments that help finance and de-risk the exploration and mining of these vital resources?" he asked.
Affirming that Sebi will continue to strengthen the integrity and safety of commodity markets, Pandey underlined that real-time margin collection and continuous monitoring are "non-negotiables" for the regulator.
Strengthening our commodity markets is "high" on Sebi's regulatory agenda, he said, listing out some measures in this regard.
Sebi has already constituted a committee to recommend measures for deepening the agri-commodities segment, Pandey said, adding the watchdog will also constitute a working group for developing the non-agri commodity space, including metals.